Question

Norah has $50,000 to invest. She is considering two investment options. Option A pays 1.5% simple interest. Option B pays 1.4% interest compounded annually.

Answer 1

Answer with Step-by-step explanation:

We are given that

P=$50,000

For A, r=1.5%

For B,r=1.4%

We know that

`A=P(1+(r)/(100))^n`

Where n=Time(in years)

r=Rate of interest annually

P=Principle value

For A

n=5 years

`A=50000(1+(1.5)/(100))^5=`$53864

n=10 Years

`A=50000(1+(1.5)/(100))^(10)=`$58027

n=20 years

`A=50000(1+(1.5)/(100))^(20)=`$67343

For B

n=5 year

`A=50000(1+(1.4)/(100))^5=`$53599

n=10 years

`A=50000(1+(1.4)/(100))^(10)`=$57458

n=20 years

`A=50000(1+(1.4)/(100))^(20)=`$66028