Question

Ahmed and Bilqis are making decisions about their investment funds. Ahmed wants to deposit $300 as a principle amount, with an growth rate of 3% compounded quarterly. Bilqis wants to deposit $300 as the principle amount, with an growth rate of 5% compounded monthly. Explain which method results in more money after 2 years. Show all work. (10 points)

Answer 1

Step-by-step explanation:

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

where A is the final amount,

P is the initial amount (principal),

r is the annual rate,

n is the number of compoundings per year,

and t is the number of years.

Under Ahmed's plan:

A = 300 (1 + 0.03/4)^(4×2)

A = 318.48

Under Bilqis's plan:

A = 300 (1 + 0.05/12)^(12×2)

A = 331.48

Bilgis's plan has more money after 2 years.