Question

Hree people go to the bank to cash in their accounts. Amy had her money in an account for 25 years at 4 percent interest. Bill had his money in an account for 20 years at 5 percent interest. Celia had her money in an account for 5 years at 20 percent interest. If each of them originally deposited $500 in their accounts, which of them gets the most money when they cash in their accounts?

1. Amy
2. Bill
3. Celia
4. They each get the same amount.

Answer 1

After calculating the compound interest for each person's account, Amy ends up with $1332.90, Bill with $1326.65, and Celia with $1244.16. Therefore, Amy receives the most money when cashing in the account. 1. Amy

Step-by-step explanation:

The question involves determining who gets the most money after cashing in their accounts with different interest rates and time periods. To solve this, we will use the formula for compound interest, which is A = P(1 + r/n)^(nt), where 'A' is the amount of money accumulated after n years, including interest, 'P' is the principal amount (the initial amount of money), 'r' is the annual interest rate (decimal), 'n' is the number of times that interest is compounded per year, and 't' is the time the money is invested for in years.

Let's calculate for each person:

• 
  
• Amy's account: A = $500(1 + 0.04/1)^(1*25) = $500(1 + 0.04)^25 = $500(2.6658) = $1332.90
• 
  
• Bill's account: A = $500(1 + 0.05/1)^(1*20) = $500(1 + 0.05)^20 = $500(2.6533) = $1326.65
• 
  
• Celia's account: A = $500(1 + 0.20/1)^(1*5) = $500(1 + 0.20)^5 = $500(2.48832) = $1244.16

Upon comparing the calculated amounts, Amy receives the most money when they cash in their accounts.