Question

Thomas deposited $800 into two different accounts. - he deposited $450 into an account that pays 4. 5% simple interest. - he deposited $350 into an account that pays 4. 25% compounded annually. If thomas does not deposit additional money into the accounts and he doesn't withdraw any money from the accounts, which is closest to the total balance he will have in the accounts at the end of 2 years?.

Answer 1

Explanation:

The total balance he will have in the accounts at the end of 2 years

is D. $870.88.

What are simple and compound interests?

Simple interest is often a predetermined percentage of the principle amount borrowed or lent paid or received over a specific time period.

Borrowers are required to pay interest on interest in addition to principal since compound interest accrues and is added to the accrued interest from prior periods.

The formula for simple interest is SI = (p×r×t)/100 and the formula for compound interest is A = P(1 + r/100)ⁿ.

∴ P + (p×r×t)/100 + P(1 + r/100)ⁿ is the total amount after 2 years.

= 450 + (450×4.5×2)/100 + 350(1 + 4.25/100)².

= 450 + 40.5 + 350(1.0425)².

= 490.5 + 380.38.

= $870.88.