Using compound interest and continuous compounding, it is found that Lincoln would have $15,856 more in his account than Eli.
<h3>What is compound interest?</h3>The amount of money earned, in compound interest, after t years, is given by:
In which:
- A(t) is the amount of money after t years.
- P is the principal(the initial sum of money).
- r is the interest rate(as a decimal value).
- n is the number of times that interest is compounded per year.
Hence, for Lincoln, we have that the parameters are as follows:
P = 49000, r = 0.06125, n = 365, t = 20.
Hence the amount will be of:
The amount is given by:
For Eli, we have that r = 0.05625, hence the amount will be given by:
It is given by:
Lincoln would have $15,856 more in his account than Eli.
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