Question

Samuel wants to deposit $4,000 and keep that money in the bank without deposits or
withdrawals for three years. He compares two different options. Option 1 will pay 3.8%
interest, compounded quarterly. Option 2 will pay 3.5% interest, compounded
continuously.
a. How much interest does Option 1 pay?
b. How much interest does Options 2 pay?

Answer 1

Answer:

First option pays $480.60 in interest and the second option pays $442.84 in interest

Step-by-step explanation:

P(1+r/n)^rt is for compound interest and Pe^rt is for continuous interest