Question

Maggie is considering two investments.

Which investment will be worth more at the end of the investment period?

A.) Investment A will be worth more because the interest rate is lower.

B.) Investment A will be worth more because the total of the principal and the interest earned for investment A is greater than the same total for investment B.

C.) Investment B will be worth more because the length of time is greater than the length of time for investment A.

D.) Investment B will be worth more because the total of the principal and the interest earned for investment B is more than the same total for investment A.

Answer 1

B is correct:
because I=prt and A in 5 years =$1500 and B in 15 years is $3360
but investment A in 15 years would be $4500.

Answer 2

Option B is the answer.

Explanation:

As it is not given if the amount is compounded, so we will consider it a simple interest.

First:

p = 10000

r = 3%

t = 3

So, putting these values in simple interest formula we get:

`I=(10000*3*5)/(100)= 1500` dollars

So, amount becomes :
`10000+1500=11500` dollars

Second:

p = 8000

r = 2.8%

t = 15

So, putting these values in simple interest formula we get:

`I=(10000*2.8*15)/(100)= 3360` dollars

So, amount becomes:
`8000+3360=11360` dollars

Now comparing both the values at the period end, we can conclude that investment A will be worth than investment B.

Answer is option B.) Investment A will be worth more because the total of the principal and the interest earned for investment A is greater than the same total for investment B.