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15 January, 14:46

Cooper invested $510 in an account paying an interest rate of 3 3/8 % compounded daily. Nora invested $510 in an account paying an interest rate of 3 7/8% compounded monthly. After 7 years, how much more money would Nora have in her account than Cooper, to the nearest dollar?

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  1. 15 January, 16:30
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    Answer: Nora have $22 in her account than Cooper

    Step-by-step explanation:

    We would apply the formula for determining compound interest which is expressed as

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

    Where

    A = total amount in the account at the end of t years

    r represents the interest rate.

    n represents the periodic interval at which it was compounded.

    P represents the principal or initial amount deposited

    Considering the Cooper's account

    P = 510

    r = 3 3/8% = 3.375% = 3.375/100 = 0.0375

    n = 365 because it was compounded daily.

    t = 7 years

    Therefore,.

    A = 510 (1+0.03375/365) ^365 * 7

    A = 510 (1.0000925) ^2555

    A = $645.966

    Considering the Nora's account

    P = 510

    r = 3 7/8% = 3.875% = 3.875/100 = 0.03875

    n = 12 because it was compounded monthly.

    t = 7 years

    Therefore,.

    A = 510 (1+0.03875/12) ^12 * 7

    A = 510 (1.003229^84

    A = $668.1

    The difference in both accounts is

    668.1 - 645.966 = $22
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