Question

Linda deposits $1,800 into an account that pays 7.5% interest, compounded annually. Anna deposits $4,000 into an account that pays 5% interest, compounded annually. If no additional deposits are made to either account, what is the balance of each at the end of 10 years? (to the nearest dollar) A) Linda's account: $3,710 Anna's account: $6,516 Eliminate B) Linda's account: $2,315 Anna's account: $5,860 C) Linda's account: $2,647 Anna's account: $6,102 D) Linda's account: $3,150 Anna's account: $4,200

Answer 1

ANSWER is A

Linda's account: $3,710

Anna's account: $6,516

Explanation:

Answer 2

A is your answer because Since the interest is compounded annually, the balances grow exponentially.

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

Linda = 1800(1 + 0.075)10 = ≈ $3,710

Anna = 4000( 1 + 0.05)10 = ≈ $6,516