Jenny invests $20,000 in an account earning 4.5% interest, compounded annually. Cam invests $20,000 in an account earning 6.5% interest, compounded annually. Given that no additional deposits are made, compare the balances of the two accounts after 5 years. (round to the nearest dollar)

A) Cam has $2,082 more in his account than Jenny.

B) Jenny has $2,082 more in her account than Cam.

C) Cam has $2,478 more in his account than Jenny.

D) Jenny has $2,478 more in her account than Cam.

Question

Guy

Mathematics

11 December, 01:55

Jenny invests $20,000 in an account earning 4.5% interest, compounded annually. Cam invests $20,000 in an account earning 6.5% interest, compounded annually. Given that no additional deposits are made, compare the balances of the two accounts after 5 years. (round to the nearest dollar)

A) Cam has $2,082 more in his account than Jenny.

B) Jenny has $2,082 more in her account than Cam.

C) Cam has $2,478 more in his account than Jenny.

D) Jenny has $2,478 more in her account than Cam.

+4

Answers (1)

Know the Answer?

Timber · Answer 1

Compound interest is given by:

A=P (1+r/100) ^n

Amount Jenny earned after 5 years will be:

A=20000 (1+4.5/100) ^5

A=$24,923.64

Amount Cam earned:

A=20000 (1+6.5/100) ^5

A=$27,401.73

Comparing the two earnings we get:

27401.73-24923.64

=$2,478.09

We conclude that Cam had $2478 more money in the account than Jenny.

Answer: C