Answer: Account 2
Step-by-step explanation:
Account 1)
Formula for CI
Amount = p(1 + r/n)^nt
A = 2500 (1 + .06/4)^4x10
A = 2500 (1 + 0.015)^40
A = 2500 (1.015)^40
A = 4535.05
Account 2.
Formula for CI for interest compounded continously
A = Pe^rt
A = 2500 x e^0.06 x 10
A = 2500 x e^0.6
A = 2500e^3/5
A = 4555.297
Account 2 should you choose to obtain the greater amount in 10 years.
You invest $2500 in an account to save for college. Account 1 pays 6% annual interest compounded quarterly. Account 2 pays 4% annual interest compounded continuously.
For Account 1
[tex]Amount = p(1 + r\div n)^{nt}\\\\A = 2500 (1 + .06\div 4)^4\times 10\\\\A = 2500 (1 + 0.015)^{40}\\\\A = 2500 (1.015)^{40}[/tex]
A = 4535.05
For Account 2:
A = Pe^rt
[tex]A = 2500 \times e^0.06 \times 10\\\\A = 2500 \times e^0.6\\\\A = 2500e^3/5[/tex]
A = 4555.297
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