Question

6. Barbara has $750 to deposit into two different savings accounts.

• Barbara will deposit $350 into accountl, which earns 4.5 % annual simple interest.
• She will deposit $400 into Account II, which earns 4 % % interest compounded annually.
Barbara will not make any additional deposits or withdrawals. Which amount is closest to
the sum of the balance of Account I and account II at the end of 3 years?

Answer 1

9514 1404 393

Answer:

(d) $850.45

Explanation:

The balance in account I is given by ...

A = P(1 +rt) . . . . principal P invested at annual rate r for t years

A = 350(1 +0.045×3) = 397.25

__

The balance in account II is given by ...

A = P(1 +r)^t

A = 400(1 +0.0425)^3 ≈ 453.20

__

The total amount in the two accounts is

$397.25 +453.20 = $850.45