Question

Conner has $875 to deposit into two different savings accounts. He will deposit $500 into Account #1, which earns 3% annual simple interest. He will deposit $375 into Account #2, which earns 3.5% interest compounded annually. After two years, what will the difference be between the Amounts in the two Accounts? PLEASE HURRY

Answer 1

Answer:

The difference between the amounts in the two accounts, after two years is $\ 128.29$

Step-by-step explanation:

Account #1

we know that

The simple interest formula is equal to

$A=P(1+rt)$

where

A is the Final Investment Value

P is the Principal amount of money to be invested

r is the rate of interest  

t is Number of Time Periods

in this problem we have

$t=2\ years\\ P=\ 500\r=3\%=3/100=0.03$

substitute in the formula above

$A_1=500(1+0.03*2)$

$A_1=500(1.06)$

$A_1=\ 530$

Account #2

we know that    

The compound interest formula is equal to  

$A=P(1+\frac{r}{n})^{nt}$  

where  

A is the Final Investment Value  

P is the Principal amount of money to be invested  

r is the rate of interest  in decimal

t is Number of Time Periods  

n is the number of times interest is compounded per year

in this problem we have  

$t=2\ years\\ P=\ 375\r=3.5\%=3.5/100=0.035\\n=1$

substitute in the formula above

$A_2=375(1+\frac{0.035}{1})^{1*2}$  

$A_2=375(1.035)^{2}$  

$A_2=\ 401.71$  

Find the difference between the amounts in the two accounts

$A_1=\ 530$

$A_2=\ 401.71$  

$A_1-A_2=\ 530-\ 401.71=\ 128.29$