Answer:
You should choose an account with a 7% annual interest rate which is compounded quarterly
Step-by-step explanation:
we know that
The compound interest formula is equal to
[tex]A=P(1+\frac{r}{n})^{nt}[/tex]
where
A is the Final Investment Value
P is the Principal amount of money to be invested
r is the rate of interest in decimal
t is Number of Time Periods
n is the number of times interest is compounded per year
part 1)
we have
[tex]t=15\ years\\ P=\$14,000\\ r=0.07\\n=4[/tex]
substitute in the formula above
[tex]A=14,000(1+\frac{0.07}{4})^{4*15}[/tex]
[tex]A=14,000(1.0175)^{60}[/tex]
[tex]A=\$39,645.43[/tex]
part 2)
we have
[tex]t=15\ years\\ P=\$14,000\\ r=0.068\\n=12[/tex]
substitute in the formula above
[tex]A=14,000(1+\frac{0.068}{12})^{12*15}[/tex]
[tex]A=14,000(1.0057)^{180}[/tex]
[tex]A=\$38,713.11[/tex]
