Question

Clara deposits 1250 into each of the two savings accounts accounts. Account 1 earns 2% annual simple interest. Account 2 earns 2% interest compounded annually. Clara does not make any additional deposits or withdrawals. What is the sum of the balances of Account 1 and Account 2 at the end of 4 years?

Answer 1

`\begin{gathered} \text{Simple interest from 1st account,} \\ I_1=\frac{\text{PRT}}{100} \\ I_1=(1250*2*4)/(100)_{} \\ I_1=100 \\ \text{Amount in first acount}\Rightarrow1250+100=1350 \\ \text{Compound interest 2nd account,} \\ A=P(1+R)^t^{} \\ A=1250(1+(2)/(100))^4 \\ A=1353.04 \end{gathered}`

The total amount is,

1350+1353.04=2703.04