Answer: There is a difference of $ 1.0228.
Explanation: Given, initial amount or principal = $ 1000,
Time= 5 years and given compound rate of interest = $3.7%
Now, Since the amount in compound continuously,
, where, r is the rate of compound interest, P is the principal amount and t is the time.
Here, P=$ 1000, t=5 years and r= $3.7%,
Thus, amount in compound continuously , ![A=1000e^{3.7\times5/100}](https://tex.z-dn.net/?f=A%3D1000e%5E%7B3.7%5Ctimes5%2F100%7D)
⇒![A=1000e^{18.5}=1000\times 1.20321844013=1203.21844013](https://tex.z-dn.net/?f=A%3D1000e%5E%7B18.5%7D%3D1000%5Ctimes%201.20321844013%3D1203.21844013)
Therefore, interest in this compound continuously rate =1203.21844013-1000=203.21844013
now, Since the amount in compound quarterly,
, where, r is the rate of compound interest, P is the principal amount and t is the time.
Thus, amount in compound quarterly, ![A=1000(1+\frac{3.7/4}{100} )^{4\times5}](https://tex.z-dn.net/?f=A%3D1000%281%2B%5Cfrac%7B3.7%2F4%7D%7B100%7D%20%29%5E%7B4%5Ctimes5%7D)
⇒![A=1000(1+\frac{3.7}{400} )^{20}](https://tex.z-dn.net/?f=A%3D1000%281%2B%5Cfrac%7B3.7%7D%7B400%7D%20%29%5E%7B20%7D)
⇒![A=1000(1+\frac{3.7}{400} )^{20}](https://tex.z-dn.net/?f=A%3D1000%281%2B%5Cfrac%7B3.7%7D%7B400%7D%20%29%5E%7B20%7D)
⇒![A= 1202.19567617](https://tex.z-dn.net/?f=A%3D%201202.19567617)
Therefore, interest in this compound quarterly rate=1202.19567617-1000=202.19567617
So, the difference in these interests=203.21844013-202.19567617=1.02276396 ≈1.0228