6.2 Exponential Models

Question

Hattie has recently inherited $7900$⁢7900, which she wants to deposit into an IRA account. She has determined that her two best bets are an account that compounds annually at an annual rate of 3.6%3.6% (Account 1) and an account that compounds semi-annually at an annual rate of 3.5%3.5% (Account 2).

Answer 1

yearly model 7900(1+.036)^t where t is the number of years

semi-annual model 7900(1+ .035/2)^2t

These terms will compare the money at the end of t years.