Question

Alejandro will deposit $1,750 in an account that earns 6.5% simple interest every year. His sister Anallency will deposit $1,675 in an account that earns 7.5% interest compounded annually. The deposits will be made on the same day, and no additional money will be deposited or withdrawn from the accounts. Which sibling will have more money at the end of four years?

Answer 1

Answer: Anallency

Explanation:

First, lets make two equations for both siblings, using the base: SI = P(1 + rt) and CI = P(1 + r/n)^nt

Alejandro = 1750(1 + 0.065[4]) = 1750 + 455 = $2,205

Anallency = 1675(1 + 0.075/1)^4 = $2236.91

After 4 years, Alejandro will have $2,205, and Anallency will have $2236.91

Since $2236.91 > 2,205, Anallency will have more money after 4 years.

Answer 2

Anallency will have mor money.

Explanation:

Simple Interest:

I = Prt

I = $1750 × 0.065 × 4

I = $455

Total after 4 years: $1750 + $455 = $2205

Compound Interest:

F = P(1 + r/n)^(nt)

F = $1675(1 + 0.075)^(4)

F = $2236.91

Answer: Anallency will have mor money.