Math Help Please!

Question

The following pair of investment plans are identical except for a small difference in interest rates. Compute the balance in the accounts after 10 and 30 years. Discuss the difference.

Chang invests ​$700 in a savings account that earns 3.75​% compounded annually. Kio invests $700 in a different savings account that earns 4.0​% compounded annually.

After 10 years Chang will have a balance of approximately

​$_______.

After 30 years Chang will have a balance of approximately

​$_____.

​(Round to the nearest cent as​ needed.)

After 10 years Kio will have

​$ ___or___% more than Chang.

After 30 years Kio will have

​$__or ___​% more than Chang.

​(Round to two decimal places as​ needed.)

Answer 1

You want to use the compound interest formula.

A = P(1+r/n)^nt , where P is the starting value, r is the rate, and n is the number of times compounded per year.

A = 700(1+ 0.0375/1)¹⁽¹⁰⁾ would give the amount after 10 years. (If interest was compounded quarterly, you would substitute n with 4)

A = 700(1.0375)¹⁰ would give you Chang's amount after 10 years. Substitute t with 30 to find the amount after 30 years.