Answer: Stella would have $15036 more than Chloe.
Step-by-step explanation:
We would apply the formula for determining compound interest which is expressed as
A = P(1+r/n)^nt
Where
A = total amount in the account at the end of t years
r represents the interest rate.
n represents the periodic interval at which it was compounded.
P represents the principal or initial amount deposited
Considering Chloe's investment,
P = 42000
r = 4.5% = 4.5/100 = 0.045
n = 1 because it was compounded once in a year.
A = 42000 × 3 = 126000
Therefore,.
126000 = 42000(1 + 0.045/1)^1 × t
126000/42000 = (1.045)^t
3 = (1.045)^t
Taking log of both side,
Log3 = tlog1.045
0.4771 = 0.019t
t = 0.4771/0.019
t = 25.11
Approximately 25 years
Considering Stella's investment,
t = 25
P = 42000
r = 4.875% = 4.875/100 = 0.04875
n = 4 because it was compounded 4 times in a year.
Therefore,
A = 42000(1 + 0.04875/4)^4× 25
A = 42000(1 + 0.0121875)^100
A = 42000(1.0121875)^100
A = 42000 × 3.358
A = $141036
The difference in amount would be
141036 - 126000 = $15036
