194k views
4 votes
Sasha has $850 into two accounts. Sasha will deposit $450 at 6% simple. She will deposit the rest at 2% compounded annually. Sasha will not make any withdrawals. How much more money will be in her account at 6% simple than at 2% compounded annually after 2 years.

User Cortfr
by
7.7k points

1 Answer

4 votes

Sasha will deposit $450 at 6% simple interest. The formula for calculating the balance of an account with simple interest is given by A = P(1 + rt), where A is the final amount, P is the initial principal balance, r is the annual interest rate (expressed as a decimal), and t is the time in years.

In this case, the initial principal balance P is $450, the annual interest rate r is 6% or 0.06 as a decimal, and the time t is 2 years. Plugging these values into the formula gives us:

A = 450(1 + 0.06 * 2)

Evaluating this expression gives us a final amount of approximately $477 in the account after two years.

Sasha will deposit the rest of her money ($850 - $450 = $400) at 2% compounded annually. The formula for calculating the balance of an account with annual compounding is given by A = P(1 + r/n)^(nt), where A is the final amount, P is the initial principal balance, r is the annual interest rate (expressed as a decimal), n is the number of times the interest is compounded per unit time (per year in this case), and t is the time in years.

In this case, the initial principal balance P is $400, the annual interest rate r is 2% or 0.02 as a decimal, n is 1 since it’s compounded annually, and the time t is 2 years. Plugging these values into the formula gives us:

A = 400(1 + 0.02/1)^(1 * 2)

Evaluating this expression gives us a final amount of approximately $416.16 in the account after two years.

Therefore, there will be approximately $60.84 more money in Sasha’s account at 6% simple interest than at 2% compounded annually after two years.

User Harald Coppoolse
by
8.8k points
Welcome to QAmmunity.org, where you can ask questions and receive answers from other members of our community.

9.4m questions

12.2m answers

Categories