Suppose that you were saving money over five years to use in a purchase later. You have $1000 to put in the savings. After surveying several banks for savings plans, you found these options. “A” stands for the amount you will have in the bank after x years.

Option A: Your money would receive simple interest at the end of five years.

The formula is A = 1000 + 1000(0.05) x.

Option B: Your money will be compounded continuously.

The formula is A = (1000)(2.71828)(0.05 x).

Option C: You will invest in a CD (Certificate of Deposit) compounded yearly

Question

Suppose that you were saving money over five years to use in a purchase later. You have $1000 to put in the savings. After surveying several banks for savings plans, you found these options.  “A” stands for the amount you will have in the bank after x years.

Option A:  Your money would receive simple interest at the end of five years.  

               The formula is A = 1000 + 1000(0.05) x.

Option B:  Your money will be compounded continuously.

               The formula is A = (1000)(2.71828)(0.05 x).

Option C:  You will invest in a CD (Certificate of Deposit) compounded yearly

anonymous · Answer

I go for Option A