Answer: $0
Step-by-step explanation:
The formula for simple interest is expressed as
I = PRT/100
Where
P represents the principal
R represents interest rate
T represents time in years
I = interest after t years
From the information given
T = 1 year
P = $450
R = 4.5%
Therefore
I = (450 × 4.5 × 1)/100
I = 2025/100
I = 20.25
For compound interest,
Initial amount deposited into the account is $450 This means that the principal,
P = 450
It was compounded annually. This means that it was compounded once in a year. So
n = 1
The rate at which the principal was compounded is 4.5%. So
r = 4.5/100 = 0.045
It was compounded for just a year. So
t = 1
The formula for compound interest is
A = P(1+r/n)^nt
A = total amount in the account at the end of t years. Therefore
A = 450 (1+0.045/1)^1×1
A = 450(1.045) = $470.25
Compound interest = 470.25 - 450 = 20.25
The difference is 20.25 - 20.25 = 0
