Question

Anastasia was trying to decide which investment plan would be best over 10 years. Bank A was offering 8.5% simple interest on her money using the formula . Bank B was offering 8% compounded annually using the formula . Which bank is a better investment if she has $2,000 to invest for 10 years?

Answer 1

Bank B is the better investment. In 10 years, her $2,000 will grow to $4,317.85, and with bank A, her $2,000 will grow to $3,700.

Step-by-step explanation:

ik this was from a bit back but i wanted the points lol sorry

Answer 2

Bank B is the better investment

Step-by-step explanation:

Investment = P = $2,000

Number of years = n = 10

If the She invest in Bank A

r = 8.5% simple interest

Accumulated value after 10 years = A =P + (P x r x n) = $2,000 + ( $2,000 x 8.5% x 10 ) = $2,000 + $1,700 = $3,700

If the She invest in Bank B

r = 8% Compounded yearly

Accumulated value after 10 years = A = P x (1 + r )^n = $2,000 x ( 1 + 8% )^10 = $2,000 x ( 1 + 0.08 )^10 = $2,000 x ( 1.08 )^10 = $2,000 x 2.1589 = $4,317.8

= $4,318

Hence Bank B is the better investment because it make more money than in Bank A after 10 years.