Small Rate Differences #12-14

Question

Fred invests $1500 at 2.5% APR compounded weekly, and
George invests $1500 at 2.55% APR compounded weekly.

 How much money does Fred have after 11 years? 

How much money does George have after 11 years? 

 How much more does George have than Fred? 

Answer 1

Knowing the formula for compound interest and the ability to use would assist you in solving most of the questions you ask.

 

A = p(1 + (r/n)^nt, where A = balance, p = principal, r = rate, n = number of calculations per year, t = number of years

 

A = 1500(1 + 0.025/52)¹²⁽¹¹⁾  This is for Fred.

A = 1500(1 + 0.000480)¹²⁽¹¹⁾

A = 1500(1.000480)¹³²

A = 1500(1.065)

A = 15980.91

 

Use this as a pattern for George.