Answer:
You will have $10,306 more
Explanation:
In this question, we are asked to calculate the difference in the amount of money we will earn if the same deposit amount is made in two different banks with different interest payment scheme
Firstly, Calculate the amount in the account as follows:
Future value = Interest + Amount = (Am ount x Period x Rate) + Amount = ($54,000 x 10 x 6%) + $54, 000 = $32,400 + $54,000 = $86,400
Therefore, the future value is
$86,400
Now, we calculate the amount by using the compounding as follows:
Future value = Amount x (1+ Rate)^n =
$54,000 * (1+0.06)^10
= $54,000 * 1.791 = $96,706
Therefore, the compound future value is
$96,706
The difference in amount is calculated as follows:
Difference in amount = $96,706 - $86,400 = $10,306
