Assume that there are no deposits or withdrawals 9000 is inv

Assume that there are no deposits or withdrawals. $9,000 is invested in each of two accounts, both paying 3% annual interest. In the first account, interest compounds quarterly, and in the second account, interest compounds daily. Find the difference between the accounts after 20 years. (Round your answer to the nearest cent. Assume 365 days in a year.) $_____________

Solution

Compounding quarterly : A = P(1 + r/4)^4n

= 9000( 1+ 0.03/4)^20*4

= $ 16362.40

Compuding daily : A = P( 1+ r/365)^(20*365)

= 9000( 1+ 0.03/365)^(20*365)

= $ 16398.66

So, Amount in the account is more than account with quartetly compouding

Difference = $ 36.26