Question

Raul has $1,200 to deposit into two different savings accounts.

Raul will deposit $450 into Account 1, which earns 4.8% annual simple interest.

He will deposit $750 into Account 2, which earns 3.75 interest compounded annually.

Raul will not make any additional deposits or withdrawals. What is the total balance of these two accounts at the end of 4 years.

(A) $86.40

(B) $1405.39

(C) $536.40

(D) 868.99

Answer 1

Compound interest is calculated by;

Initial amount x (100%xinterest%)^(years)

My workings which I also checked with another and they agree doesn't come back to your options. But closest answer is B.

Explanation:

$450x(1.048^4) = $542.82

$750x(1.0375^4) = $868.99

$542.82 + $868.99 = $1,411.81