Question

(40 POINTS) A newly hired lawyer receives a $15,000 signing bonus from a law firm and invests the money in a savings account at 4.75% interest. After 42 months, the lawyer checks the account balance.

Part A: Calculate the interest earned, to the nearest dollar, if the interest is compounded quarterly. Show all work. (2 points)

Part B: Calculate the interest earned, to the nearest dollar, if the interest is compounded continuously. Show all work. (2 points)

Part C: Using the values from Part A and Part B, compare the interest earned for each account by finding the difference in the amount of interest earned. (1 point)

Answer 1

after 42 months he has $2,696 in interest

compound quarterly is equivalent to annual rate of 4.835%

Part b

after 42 months he has $2,713 compound continuously

the diffrence is $17

15000 + 4.75% · 42 compound quarterly is $2,696

15000 + 4.75% · 42 compound continuously is $2,696