Final answer:
You save $8,500.00. Your original plan was to place 40% in a savings account earning, the difference in the total gain compared to the original plan is B. $85.25.
Step-by-step explanation:
To find the difference in the total gain compared to the original plan, we need to calculate the total gain for each plan and then subtract one from the other.
In the original plan, 40% of $8,500 is invested in a savings account at an APR of 4.2% compounded annually.
The remaining 60% is invested in a stock plan that decreases by 3% in the first year and increases by 7.5% in the second year.
In the revised plan, 60% of $8,500 is invested in a savings account and the rest is invested in the stock plan.
To calculate the total gain for the original plan, we will use the compound interest formula:
$8,500(1 + 0.042)^2 - $8,500(1 - 0.03)(1 + 0.075)
The total gain for the revised plan can be calculated as:
$8,500(1 + 0.042) - $8,500(1 - 0.03)(1 + 0.075)
By subtracting the total gain of the revised plan from the original plan, we can find the difference in the total gain.
The correct answer is b. $85.25.