Question

Mariah will deposit $1,530 in an account that earns 6% simple interest every year. Her

sister Isabel will deposit $1,500 in an account that earns 8% interest compounded
annually. The deposits will be made on the same day, and no additional money will be
deposited or withdrawn from the accounts. Which statement about the balances of
Mariah's account and Isabel account at the end of the 3 years is true?

Answer 1

After 3 years Mariah will have $1,805.40 while her sister Isabel will have $1,889.56.

Explanation:

Since Mariah will deposit $ 1,530 in an account that earns 6% simple interest every year, while her sister Isabel will deposit $ 1,500 in an account that earns 8% interest compounded annually, and the deposits will be made on the same day, and no additional money will be deposited or withdrawn from the accounts, to determine the balances of Mariah's account and Isabel account at the end of the 3 years the following calculations must be performed:

Mariah:

1,530 + ((1,530 x 0.06) x 3) = X

1,530 + (91.8 x 3) = X

1,530 + 275.4 = X

1,805.4 = X

Isabel:

1,500 x (1 + 0.08 / 1) ^ 3x1 = X

1,500 x 1.08 ^ 3 = X

1,500 x 1,259712 = X

1,889.568 = X

Therefore, after 3 years Mariah will have $ 1,805.40 while her sister Isabel will have $ 1,889.56.