Mathematics: How much more would $5,656.30 earn in 5 years, compounded monthly at 4.1%, when compared to the interest on $5,656.30 over 5 years, at 4.1% compounded quarterly?

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How much more would $5,656.30 earn in 5 years, compounded

jayme2407

17.01.2022

$\$4.81$

Step-by-step explanation:

we know that

The compound interest formula is equal to

$A=P(1+\frac{r}{n})^{nt}$

where

A is the Final Investment Value

P is the Principal amount of money to be invested

r is the rate of interest in decimal

t is Number of Time Periods

n is the number of times interest is compounded per year

step 1

in this problem we have

$t=5\ years\\ P=\$5,656.30\\ r=0.041\\n=12$

substitute in the formula above

$A=\$5,656.30(1+\frac{0.041}{12})^{12*5}=\$6,940.82$

step 2

in this problem we have

$t=5\ years\\ P=\$5,656.30\\ r=0.041\\n=4$

substitute in the formula above

$A=\$5,656.30(1+\frac{0.041}{4})^{4*5}=\$6,936.01$

step 3

Find the difference

$\$6,940.82-\$6,936.01=\$4.81$

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