Lynsey invests 3000 in a bond trust that pays 8 interest com

Lynsey invests $3000 in a bond trust that pays 8% interest compounded semi-annually. Her friend, Lyla, invests $3000 in a certificate of deposit that pays 7.75% compounded monthly. Who has more money after 20 years? Show detailed steps.

Solution

Lynsey invests $3000 in a bond trust that pays 8% interest compounded semi-annually

Amount = Principal(1 +rate/2*100)^2*years

= 3000( 1+8/200)^40

= $ 14403.06

Lyla, invests $3000 in a certificate of deposit that pays 7.75% compounded monthly

Amount = Principal(1 +rate/12*100)^12*years

= 3000(1 + 7.75/1200)^12*20

= $14,064.14

So, Lynsey has more money after 20 years