Question

Harrison and Sherry are making decisions about their bank accounts Harrison wants to deposit $200 as a principal amount with an interest rate of 2% compounding quarterly Sherry wants to deposit $200 as a principal now with an interest at 4% compound at monthly explain which method result in more money after two years show all work

Answer 1

Answer:

Sherry's Method of depositing $200 as a principal now with an interest at 4% compound at monthly will result in more money after two years.

Step-by-step explanation:

We use the Total Amount generated using compound interest formula to solve this question

Formula =

Total Amount(A) = P(1 + r/n)^nt

a) For Harrison

Principal = $200

Interest rate = 2% = 0.02

Time = 2 years

n = compounding quarterly = 4

A = P(1 + r/n)^nt

A = $2,000(1 + 0.02/4)^2×4

A = $2,000(0.005)^8

A = $ 2081.4140878

A = $ 2,081.41

b) For Sherry

Principal = $200

Interest rate = 4% = 0.04

Time = 2 years

n = compounding monthly = 4

A = P(1 + r/n)^nt

A = $2,000(1 + 0.04/12)^2×12

A = $2166.2859184

A = $ 2,166.29

The Total Amount for

Harrison = $ 2,081.41

Sherry = $ 2,166.29

Hence, from the above calculation, Sherry's Method of depositing $200 as a principal now with an interest at 4% compound at monthly will result in more money after two years.