Answer:
$156.463
Step-by-step explanation:
Given that :
Principal = 5000 ; interest rate (r) = 6% = 0.06 ; interest periods (n) = 4 ; number of years (t) = 12
The compound interest formula:
A = P(1 + r/n)^nt
Investment compounded periodically :
A = 5000(1 + 0.06/4)^(4 * 12)
A = 5000(1.015)^48
A = 5000(2.0434782)
A = 10217.391
Investment compounded annually :
A = P(1 + r/n)^nt
A = 5000(1 + 0.06)^12
A = 5000(1.06)^12
A = 5000(2.012196471835550329409536)
A = 10060.98235917775164704768
A = 10060.928
Difference :
10217.391 - 10060.928 = $156.463
