John and Randy are competing to see who can accumulate more money. They are both given $100 to deposit into an account and see who has more after a year. John decides to deposit his whole amount into an account that pays interest at a rate of 3%, compounded continuously and withdraws it at the end of the year. Randy puts his money into an account that earns interest at 3% compounded semiannually, and after half a year, pulls out all his money and puts it in another account that earns interest at 4% compounded semiannually. Who has more money at the end of the year, and by how much?
John and Randy are competing to see who can accumulate more money. They are both given $100 to deposit into an account and see who has more after a year. John decides to deposit his whole amount into an account that pays interest at a rate of 3%, compounded continuously and withdraws it at the end of the year. Randy puts his money into an account that earns interest at 3% compounded semiannually, and after half a year, pulls out all his money and puts it in another account that earns interest at 4% compounded semiannually. Who has more money at the end of the year, and by how much?
Chapter4: Time Value Of Money
Section: Chapter Questions
Problem 16PROB
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Transcribed Image Text:14. John and Randy are competing to see who can
accumulate more money. They are both given $100 to
deposit into an account and see who has more after a
year. John decides to deposit his whole amount into an
account that pays interest at a rate of 3%, compounded
continuously and withdraws it at the end of the year.
Randy puts his money into an account that earns
interest at 3% compounded semiannually, and after half
a year, pulls ut all his moncy and puts it in another
account that earns interest at 4% compounded
semiannually, Who has more money at the end of the
year, and by how much?
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