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Diana can either invest $20,\!000$ dollars for $4$ years with a simple interest rate of $6\%$ or an interest rate of $7\%$ which compounds quarterly. How many more dollars, rounded to the nearest dollar, would she get with the better interest rate?

 Dec 14, 2014

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 #3
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the question asks  " How many more dollars ...." that implies  a subtraction and a worked answer.

 Dec 15, 2014
 #1
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Simple Interest:

Simple Interest  =  Principal x Rate x Time   --->   20000 x 0.06 x 4  =  4800.00

Total Value  =  $20,000.00 + $4,800.00  =  $24,800.00

Compound Interest:

A  =  P(1 + r/n)n·t

Where A = Total Amount         P = Principal = 20000         r = yearly rate (as a decimal) = 0.07

n = number of times compounded per year = 4                 t = number of years = 4

A = 20000(1 + 0.07/4)4·4  =  20000(1 + 0.0175)16  =  $26,398.59

Combine these figures for the final answer ...

 Dec 14, 2014
 #2
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What do I combine? sorry

 Dec 14, 2014
 #3
avatar+118703 
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Best Answer

the question asks  " How many more dollars ...." that implies  a subtraction and a worked answer.

Melody Dec 15, 2014

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