Question

Which amount is closest to the total balance of these two accounts at the end of 2 years?

Answer 1

We have the following for Accoun I:

`\begin{gathered} A=P(1+rt) \\ P=400 \\ r=3.5\%=0.035 \\ t=2 \\ \Rightarrow A=400\cdot(1+0.035(2))=400(1.07)=428 \\ A_1=428 \end{gathered}`

For account II, we have:

`\begin{gathered} A=P(1+r)^t \\ P=250 \\ r=3.25\%=0.0325 \\ t=2 \\ \Rightarrow A=250(1+0.0325)^2 \\ \Rightarrow A=250(1.0325)^2 \\ \Rightarrow A=266.51 \\ A_2=266.51 \end{gathered}`

therefore, the total balance between the two acounts is:

`\begin{gathered} A=A_1+A_2=428+266.51=694.51_{} \\ A=694.51 \end{gathered}`

Therefore, the amount after two years is $694.51