Question

Richard and Anna are saving for college.*4 points• Richard has saved $100 every year for the past 7 years in an account that has a simpleinterest rate of 12%.• Anna has saved $700 this year in cash.who has saved a greater amount of money, and why?Richard has more money in his college account, because he invested regularly over along period of time in an account that earns interest.Anna has more money in her college account, because she saved a greater amount ofmoney at one time and cash has a higher value.It is impossible to determine whether Richard or Anna have more money in theircollege accounts.Richard and Anna have the same amount in their college accounts, because they bothinvested $700.

Answer 1

Given:

For Richard :

$\begin{gathered} \text{Amount saved every year = \ 100} \\ \text{period = 7 years} \\ S\mathrm{}I\text{ rate = 12\%} \end{gathered}$

We can proceed to calculate the simple interest on the $100 saved yearly by Richard :

$\begin{gathered} S\mathrm{}I\text{ = }\frac{P\text{ }\times\text{ R }\times\text{ T}}{100} \\ =\text{ }\frac{100\text{ }\times12\text{ }\times\text{ 7}}{100} \\ =\text{ \ 84} \end{gathered}$

The total amount of money Richard has at the end of 7 years:

$\begin{gathered} =\text{ 100 }\times\text{ 7 + 84 } \\ =\text{ \ 784} \end{gathered}$

For Anna, she saved $700 this year only

We can conclude that :

Richard has more money in his college account, because he invested regularly over a

long period of time in an account that earns interest.

The right option is A