Question

Jameson and Quincy each deposit $7,000 into accounts that earn 6% interest, but Jameson earns annual simple interest while Quincy earns annual compound interest. Assuming neither one of them makes any deposits or withdrawals for 5 years, which of the following is a true statement?

Jameson will have about $9,367.58 less in his account than Quincy.


Jameson will have about $267.58 less in his account than Quincy.


Jameson will have about $2,367.58 more in his account than Quincy.


Jameson will have about $2,100 more in his account than Quincy.

Answer 1

$267.58

Explanation:

Jameson: simple interest

6% =.06 .06 x 5 = .3 .3 x 7000 = 2,100 = interest

6% =.06 .06 x 5 = .3 .3 x 7000 = 2100 2100 + 7000 = 9,100 = total

Quincy: compound interest

6% =.06 .06 x 5 x 1 = .3 x 7000 = 2100

6% =.06 .06 x 5 x 1 = .3 x 7000 = 2100 + 7000 = 9100

.06 x 5 x 1 x 9100 = 2730 + 9100=11830

repeat five times u would get a interest of 2,367.58

and a total of 9,367.58

the total amounts 9,367.58 - 9,100 = 267.58

the interests 2,367.58 - 2,100. = 267.58