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The difference between the amount in two cards of Sandra after 4 years will be $125.58 approx.
<h3>How to find the compound interest?</h3>If n is the number of times the interested is compounded each year, and 'r' is the rate of compound interest annually, then the final amount after 't' years would be:
For this case, Sandra has got 2 credit cards p and q. Calculating the final amount both card will have after 4 years:
- Case 1: For card p:
Initial amount = p = $726.19
The rate of interest is r = 10.19% = 10.19/100 = 0.1019 (converted percent to decimal)
Years for which amount is compounded = 4 years, Thus, t = 4
The interest is compounding semiannually, that means twice per year, thus, n = 2
Thus, the final amount in card p after 4 years would be:
- Case 2: For card q:
Initial amount = p = $855.20
The rate of interest is r = 8.63% = 8.63/100 = 0.0863 (converted percent to decimal)
Years for which amount is compounded = 4 years, Thus, t = 4
The interest is compounding monthly, that means twelve times per year, thus, n = 12
Thus, the final amount in card q after 4 years would be:
Clearly card q has more amount than card p at the end of 4 years.
The difference is: 1206.28 - 1080.70 = 125.58 (in dollars)
Learn more about compound interest here: