Question

Jaina and Tomas compare their compound interest accounts to see how much they will have in the accounts after three years. They substitute their values shown below into the compound interest formula. Compound Interest Accounts Name Principal Interest Rate Number of Years Compounded Jaina $300 7% 3 Once a year Tomas $400 4% 3 Once a year. Which pair of equations would correctly calculate their compound interests?

Answer 1

To calculate the compound interests for Jaina and Tomas, we use the formula Future Value = Principal x (1 + interest rate)^number of years, which yields the equations, Future Value = $300 x (1 + 0.07)^3 for Jaina, and Future Value = $400 x (1 + 0.04)^3 for Tomas.

Step-by-step explanation:

The correct pair of equations to calculate the compound interests for Jaina and Tomas can be formulated using the compound interest formula: Future Value = Principal × (1 + interest rate)number of years compounding. For Jaina, the equation with her values substituted will be: Future Value = $300 × (1 + 0.07)3. For Tomas, the equation will be: Future Value = $400 × (1 + 0.04)3.

Compound interest

is then found by subtracting the principal from the future value calculated for each. Hence for Jaina:

Compound Interest = Future Value - $300

and for Tomas:

Compound Interest = Future Value - $400

.

Answer 2

D - Jaina: A = 300(1+0.07)^3, Tomas: A = 400(1+0.04)^3