A bank offers two interest account plans. Plan A gives you 6% interest compound annually. Plan B gives you 13% annual simple interest. You have to invest $2,000 for the next 4 years. Which account earns you the more interest (in dollars) after 4 years? How much will you have earned?

Question

i_love_my_nieces · Answer

@SolomonZelman

i_love_my_nieces · Answer

@SolomonZelman  can you please help me?

solomonzelman · Answer

$\huge\color{blue}{     A=P(1+\frac{r}{n} )^{nt}}$ 

P = principal amount (the initial amount you borrow or deposit)
r  = annual rate of interest (as a decimal)
t  = number of years the amount is deposited or borrowed for.
A = amount of money accumulated after n years, including interest.
n  =  number of times the interest is compounded per year

$\huge\color{blue}{     A=2000(1+\frac{.06}{1} )^{(1 \times 4)}=?}$ (you tell me)

this is compound annually at 6%

i_love_my_nieces · Answer

Idk.

solomonzelman · Answer

you can't calculate this ?

i_love_my_nieces · Answer

I don't have a calculator to do it :'(

solomonzelman · Answer

the other one    13% simple interest.

$\huge\color{blue}{    2000 \times  0.13  }$ <-- the interset you get each year.
So that times 4 + the original 2000.

solomonzelman · Answer

can you at least do the simple annual 13% interest for me?

i_love_my_nieces · Answer

1040?

solomonzelman · Answer

that's what you get each year.

There are 4 years, so the interest altogether would be 260*4  e.i.  1040
+ the principal amount (the deposit)  2000+1040 ... = 3040

solomonzelman · Answer

now,  ....    annually compounded at 6%  interest.

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