Question

Three friends decide that they each want to be able to buy a new bike in four years.IIiana puts $500 in a savings account with a simple interest rate of 4%. Joann invests S515 in a standard savers account with a simple interest rate of 3%. Cyndy invests $500 in a junior achievers account with a 3.5% compound interest rate.

Using the formula - Prt for simple interest and A-P(1+r) for compound interest, who will have the most money to s

1. a new bike at the end of the four years?
2. Joann will have the most money, $576.80 for the bike
3. Cyndy will have the most money, $580.00 for the bike.
4. Cyndy will have $576.80, the most money for the bike
5. Wana will have $580.00, the most money for the bike.

Answer 1

Lliana with a total sum of $580

Explanation:

With the question tabled out,we can derive the respective amount of money available to the three individuals after a four years period.

For both lliana and Joann, simple interest:

I = p×r×t

where p is the principal, r is the rate and t is time.

The total amount of money available will be

p + I

For Cyndy, compound interest: Total money = P × (1+r)^t

We can calculate the total money of each one after the 4 years period

Iliana: P = 500 and r = 0.04:

I = 500 × 4/100 × 4

= 5 × 16

= 80

Total money (P + I )

500 + 80 = $580

Joann: P = 515 and r = 0.03:

Total money = 515 + (515 × 0.03 × 4 )= $576.80

Cyndy: P = 500 and r = 0.035:

Total money = 500×(1+[3.5/100])⁴= $573.8

From the above calculations,we can all agree that Lliana has the most money after these four year period

Answer 2

Iliana will have the most money, with a total of $580

Explanation:

We can find the amount of money that each one will have using the formulas of interest:

For Iliana and Joann, simple interest: Total money = P + P*r*t

For Cyndy, compound interest: Total money = P*(1+r)^t

So, using the time of four years, we can calculate the total money of each one:

Iliana: P = 500 and r = 0.04:

Total money = 500 + 500*0.04*4 = $580

Joann: P = 515 and r = 0.03:

Total money = 515 + 515*0.03*4 = $576.8

Cyndy: P = 500 and r = 0.035:

Total money = 500*(1+0.035)^4 = $573.7615

So Iliana will have the most money, with a total of $580