Question

marcia has four savings accounts. which account has the largest balance? a. $100 deposited 1 year ago at an 8 percent interest rate b. $100 deposited 2 years ago at a 4 percent interest rate c. $100 deposited 4 years ago at a 2 percent interest rate d. $100 deposited 8 years ago at a 1 percent interest rate

Answer 1

Upon computing the effects of compound interest on each account, it is shown that account D, with $100 deposited 8 years ago at a 1% interest rate, has the largest balance. Therefore, the correct option is D.

Step-by-step explanation:

To determine which savings account has the largest balance, we need to calculate the amount of money in each account after compound interest has been applied.

• Account A: $100 at an 8% interest rate compounded annually for 1 year becomes $108.00.
• Account B: $100 at a 4% interest rate compounded annually for 2 years becomes $108.16.
• Account C: $100 at a 2% interest rate compounded annually for 4 years becomes $108.24.
• Account D: $100 at a 1% interest rate compounded annually for 8 years becomes $108.30.

Thus, account D has the largest balance after interest is compounded over the given periods.