Question

Larry and Peggy are making decisions about their bank accounts. Larry wants to deposit $350 as a principle amount, with an interest of 4% compounded quarterly. Peggy wants to deposit $350 as the principle amount, with an interest of 6% compounded monthly. Explain which method results in more money after 2 years. Show all work

Answer 1

You use A=P(1+r/n)^nt

So for Larry:
A=350(1+0.04/4)^4x2

And for Peggy:
A=350(1+0.06/12)^12x2

A=amount
P=principle amount
R=rate
N= number of times compounded in a year
T= time (so two years)