Question

Larry and Peggy are making decisions about their bank accounts. Larry wants to deposit $350 as a principle amount, with an interest of 4% compounded quarterly. Peggy wants to deposit $350 as the principle amount, with an interest of 6% compounded monthly. Explain which method results in more money after 2 years. Show all work.

Answer 1

Answer:

depositing $350 as the principle amount, with an interest of 6% compounded monthly  results in more money after 2 years

Step-by-step explanation:

The formula for calculating future value:

FV = P (1 + r)^nm

FV = Future value  

P = Present value  

R = interest rate  

m = number of compounding

N = number of years

$350 x ( 1 + 0.04/4)^(4 x2) = $379

$350 x (1 + 0.06/12)^(12 x2) = $394.51