### Compound Interest Comparison for Patrick and BrooklynPatrick and Brooklyn are making decisions about their bank accounts. Patrick wants to deposit $300 as the principal amount, with an interest of 3% compounded quarterly. Brooklyn wants to deposit $300 as the principal amount, with an interest of 5% compounded monthly. Explain which method results in more money after 2 years. Show all work.#### Patrick's Account (3% Interest Compounded Quarterly)Formula: $ A = P \left(1 + \frac{r}{n}\right)^{nt} $- $ P = 300 $ (Principal amount)- $ r = 0.03 $ (Annual interest rate)- $ n = 4 $ (Number of times interest is compounded per year)- $ t = 2 $ (Time in years)\[ A = 300 \left(1 + \frac{0.03}{4}\right)^{4 \times 2} \]\[ A = 300 \left(1 + 0.0075\right)^8 \]\[ A = 300 \left(1.0075\right)^8 \]\[ A = 300 \times 1.06152006 \]\[ A \approx 318.46 \]#### Brooklyn's Account (5% Interest Compounded Monthly)Formula: $ A = P \left(1 + \frac{r}{n}\right)^{nt} $- $ P = 300 $ (Principal amount)- $ r = 0.05 $ (Annual interest rate)- $ n = 12 $ (Number of times interest is compounded per year)- $ t = 2 $ (Time in years)\[ A = 300 \left(1 + \frac{0.05}{12}\right)^{12 \times 2} \]\[ A = 300 \left(1 + 0.00416667\right)^{24} \]\[ A = 300 \left(1.00416667\right)^{24} \]\[ A = 300 \times 1.10494134 \]\[ A \approx 331.48 \]#### ConclusionAfter 2 years, Patrick's account will have approximately $318.46, while Brooklyn's account will have approximately $331.48. Therefore, Brooklyn's method of depositing

Solution:- When an amount is invested in bank, it earns some interest. The amount invested initially…

Patrick and Brooklyn are making decisions about their bank accounts. Patrick wants to deposit $300 as principal amount, with an interest of 3% compounded quarterly. Brooklyn wants to deposit $300 as the principal amount, with an interest of 5% compounded monthly. Explain which method results in more money after 2 years. Show all work.

Patrick and Brooklyn are making decisions about their bank accounts. Patrick wants to deposit $300 as principal amount, with an interest of 3% compounded quarterly. Brooklyn wants to deposit $300 as the principal amount, with an interest of 5% compounded monthly. Explain which method results in more money after 2 years. Show all work.

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 3PA: Use the tables in Appendix B to answer the following questions. A. If you would like to accumulate...

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