Question

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Answer 1

Answer:

$95.42  more

Step-by-step explanation:

To find out how much money was made with Investment A after 2 years:

First, we are told that 160 dollars is saved per month for 2 years.  There are 24 months in 2 years, so we have to multiply $160 by 24 months.

160 *24=$3840 after 2 years.

Next, we learn thar 2.5% interest rate is added to the total amount saved in those two years.  So, we must turn 2.5% in to a decimal, which is 0.025.

Now, multiply 3840*0.025 to get $96.

We have to add that on the the amount saved, so 3840+96=$3936.

Investment A made $3936 after 2 years.

To find out how much money was made with Investment B.

So, we have to find compound interest.  The formula for compound interest is:

$A=P(1+\frac{r}{n} )^{nt}$

In this problem: P=3800, r=3% or 0.03, n=1, and t=2.

So, lets write it out: $A=3800(1+\frac{0.03}{1} )^{2*1}$

That becomes: $A=3800(1.03)^{2}$

Simplify it even further: $A=3800(1.0609)$

Multiply the last two numbers to get: $A=4031.42$

Investment B made $4031.42 after 2 years.

The question asks us to find out how much more money Investment B made than Investment A after 2 years.  It's simple.  Just subtract Investment A's amount from Investment B's amount.

4031.42-3936=95.42

Investment B made $95.42 more than Investment A after 2 years.