Ask Question
12 January, 06:25

Penny makes deposits into two separate accounts for 5 years: option A: $800; 6% annual simple interest option B: $800; 6% annual compound interest. A. What is the interest earned on option A? B. What is the total value of option A? C. What is the interest earned on option B? D. What is the total value on option B? E. Which is the better option?

0
Answers (1)
  1. 12 January, 08:13
    0
    A) P = 240

    B) P + Po = 1040

    C) P = 270.58

    D) P+Po = 1070.58

    E) Option B (compound interest) is better, as it generates more interest for the same inicial value, rate of interest and time

    Step-by-step explanation:

    The formula for simple interest is:

    P = Po*r*t

    Where P is the interest earned, Po is the inicial value, r is the rate of interest and t is the time.

    The formula for compound interest is:

    P+Po = Po * (1+r) ^t

    So we have that:

    A) P = 800*0.06*5 = 240

    B) P + Po = 800 + 240 = 1040

    C) P+Po = 800 * (1+0.06) ^5 = 1070.58 - > P = 1070.58 - 800 = 270.58

    D) P+Po = 1070.58

    E) Option B (compound interest) is better, as it generates more interest for the same inicial value, rate of interest and time
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “Penny makes deposits into two separate accounts for 5 years: option A: $800; 6% annual simple interest option B: $800; 6% annual compound ...” in 📘 Mathematics if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers