Question

Jerry and Carlos each have $1,000 and are trying to increase their savings. Jerry will keep his money at home and add $50 per month from his part-time job.
Carlos will put his money in a bank account that earns a 4% yearly interest rate, compounded monthly. Who has a better plan for increasing his savings?

Answer 1

Answer:

Jerry has a better saving plan for increasing his savings than Carlos

Step-by-step explanation:

Jerry's initial principal = $1000

Carlos initial principal = $1000

Jerry add $50 monthly this means that in 6 months he has

$50 x 6 = $300 as interest

This means that at the end of 6 months, Jerry would have $1,300 dollars at home

For Carlos the interest rate is 4% per year compounded monthly

If we calculate his interest per month we have:

Interest = 1000 x 4/(100 x 12) = $3.33

2nd month = 1003.33 x 4/(100 x 12) = $3.34

3rd month = 1006.68 x 4/(100 x 12) = $3.36

4th month = 1010.04 x 4/(100 x 12) = $3.37

5th month = 1013.41 x 4/(100 x 12) = $3.38

6th month = 1016.79 x 4/(100 x 12) = $3.40

At the end of 6 month, Carlos would have $1020.18 in the bank

Hence, Jerry has a better saving plan for increasing his savings than Carlos