Answer:
A) $2,344.53
B) $2,340.36
C) Based on my answer in A and B, the Option i would choose is Option A. This is because the amount i would receive after 2 years in Option A is higher than that of Option B
Step-by-step explanation:
We solve for A and B using Compound Interest formula
A). You plan to invest $1978 in an account with two different options. Option 1 earns 8.5% annually, with interest to be compounded continuously. How much money would you have in the account after 2 years?
First, convert R as a percent to r as a decimal
r = R/100
r = 8.5/100
r = 0.085 rate per year,
Then solve the equation for A
The formula is given as
A = Pe^rt
A = 1,978.00(2.71828)(0.085)(2)
A = $2,344.53
B). You plan to invest $1978 in an account with two different options. Option 2 earns 8.5% annually, with interest to be compounded quarterly. How much money would you have in the account after 2 years?
First, convert R as a percent to r as a decimal
r = R/100
r = 8.5/100
r = 0.085 rate per year,
Then solve the equation for A
The formula is given as
A = P(1 + r/n)^nt
P = Principal = $1978
r = 0.085
n = compounded quarterly = 4
A = 1,978.00(1 + 0.085/4)(4)(2)
A = 1,978.00(1 + 0.02125)(8)
A = $2,340.36
C). You plan to invest $1978 in an account with two different options. Based on your two previous answers, which option would you choose and why?
Based on my answer in A and B, the Option i would choose is Option A. This is because the amount i would receive after 2 years in Option A is higher than that of Option B
