Question

Cam and Madison were investing money into two different accounts. They both invested $550

each. Cam invested into an account at an annual interest rate of 2.7% compounded monthly and
Madison invested into an account that had an annual interest rate of 3% compounded quarterly.
Which statement below best describes the two accounts after 5 years?

Answer 1

After 5 years, Cam's account will have $ 616.04 while Madison's account will have $ 638.53.

Explanation:

Given that Cam and Madison were investing money into two different accounts, both investing $ 550 each, and Cam invested into an account at an annual interest rate of 2.7% compounded monthly while

Madison invested into an account that had an annual interest rate of 3% compounded quarterly, to determine the balances of both accounts after 5 years, the following calculations must be performed:

Cam

X = 550 (1 + 0.027 / 12) ^ 5x12

X = 550 (1 + 0.027 / 12) ^ 60

X = 616.04

Madison

X = 550 (1 + 0.03 / 3) ^ 5x3

X = 550 (1 + 0.03 / 3) ^ 15

X = 638.53

Thus, after 5 years, Cam's account will have $ 616.04 while Madison's account will have $ 638.53.