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Jon deposits $4,500 into an account paying 7% annual interest compounded quarterly and Sara deposits $3,250 into an account paying 4% annual interest compounded daily, who will have more money after 1 year? How much more will that person have? Show and explain all work.

Answer :

Answer:

Jon will have more money than Sara after 1 year . Jon will have 1440.738 dollars excess money than Sara

Step-by-step explanation:

As we know

Amount received after application of compound interest is calculated as

[tex]A = P (1+\frac{r}{n})^{nt}[/tex]

For Jon

[tex]A = 4500(1+\frac{7}{4*100})^{4} \\A= 4823.366[/tex]

Jon receives $ 4823.366 after one year

For Sara

[tex]A = 3250 (1+\frac{4}{365*100})^{365*1} \\A = 3382.628[/tex]

Jon will have more money than Sara after 1 year . Jon will have 1440.738 dollars excess money than Sara

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