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Martin’s mother deposited $600 into an account that earns 5.75% simple annual interest. His dad deposited $600 into an account that earns 5.25% compound interest. After 3 years, what will be the total balance of the two investments, rounded to the nearest cent?

A. $1,403.05
B. $803.05
C. $203.05
D. $4362.95

User Mensi
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1 Answer

6 votes

Final answer:

The total balance of the two investments after 3 years will be $1323.41.

Step-by-step explanation:

To calculate the total balance after 3 years, we need to calculate the interest for both the simple interest and compound interest accounts. For Martin's mother's account, the total balance with simple interest will be $600 + ($600 × 0.0575 × 3) = $661.50. For Martin's dad's account, the total balance with compound interest can be calculated using the formula:

Total Balance = Principal × (1 + Interest Rate)^Time. Substituting the values, we get:

Total Balance = $600 × (1 + 0.0525)^3 = $661.91.

Therefore, the total balance of the two investments after 3 years will be $661.50 + $661.91 = $1323.41. Rounded to the nearest cent, the answer is $1323.41.

User Ivan G
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