Skylar plans to use $3400 to open a savings account with an annual interest rate of 1.15%. How much more interest will he earn o
ver 13 years if he chooses a compound interest account that compounds interest quarterly instead annually? Round your answer to the nearest cent. interest compounded annually: A = P (1 + r)t interest compounded quarterly: A = P (1 +fraction numerator r over denominator 4 end fraction)4t
Given Present investment, P = 3400 APR, r = 0.0115 compounding time = 13 years Future amount, A
A. compounded annually n=13*1=13 i=r=0.0114 A=P(1+i)^n =3400*(1+0.0115)^13 =3944.895
B. compounded quarterly n=13*4=52 i=r/4=0.0115/4 A=P(1+i)^n =3400*(1+0.0115/4)^52 =3947.415
Therefore, by compounding quarterly, he will get, at the end of 13 years investment, an additional amount of 3947.415-3944.895 =$2.52 (to the nearest cent)
