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Brian invests $10,000 in an account earning 4% interest, compounded annually for 10 years. Five years after Brian's initial investment, Chris invests $10,000 in an account earning 7% interest, compounded annually for 5 years. Given that no additional deposits are made, compare the balances of the two accounts after the interest period ends for each account. (round to the nearest dollar)

Respuesta :

Brian will get 40,000 then Chris will get 70,000

Compound interest formula is  [tex]A = P(1+r)^t[/tex]

Where P is the principal amount

r is the rate of interest

t is number of years

Brian invests $10,000 in an account earning 4% interest, compounded annually for 10 years

P = 10,000  , r= 4% = 0.04 , t =10

Plug in all the values

[tex]A = 10000(1+0.04)^{10}[/tex] = 14,802.44

Chris invests $10,000 in an account earning 7% interest, compounded annually for 5 years.

P = 10,000  , r= 7% = 0.07 , t =5

Plug in all the values

[tex]A = 10000(1+0.07)^5[/tex] = 14,025.52

Brian balance  after the interest period = $ 14,802.44

Chris balance  after the interest period = $ 14,025.52

Balance in Brian's account is more than Chris account