Answer:
"Compounded monthly" is the correct approach.
Step-by-step explanation:
Harrison,
Given that:
Principle,
P = $200
Interest rate,
R = 2%
Compounded quarterly,
R = [tex]\frac{1}{4}\times 2[/tex]
= [tex]\frac{2}{4}[/tex]
After 2 years, the amount (A) will be:
= [tex]P(1+\frac{R}{100} )^n[/tex]
By putting the values, we get
= [tex]200\times (1+\frac{2}{400} )^{4\times 2}[/tex]
= [tex]200\times (1+\frac{2}{400} )^8[/tex]
= [tex]208.14[/tex] ($)
Sherrie,
Given that,
Principle (deposited),
P = $200
Interest rate,
R = 4%
After 2 years, the amount (A) will be:
= [tex]P(1+\frac{R}{100\times 12} )^{12\times 2}[/tex]
= [tex]200\times (1+\frac{4}{1200} )^{24}[/tex]
= [tex]216.628[/tex] ($)
