A bank offers two interest account plans. Plan A gives you 6% interest compound annually. Plan B gives you 13% annual simple interest. You plan to invest $2,000 for the next four years. Which account earns you the most interest (in dollars) after four years? How much will you have earned?
A.) Plan A; $524.95
B.) Plan B; $524.95
C.) Plan B; $1,040.00
D.) Plan A; $1,040.00

Question

A bank offers two interest account plans. Plan A gives you 6% interest compound annually. Plan B gives you 13% annual simple interest. You plan to invest $2,000 for the next four years. Which account earns you the most interest (in dollars) after four years? How much will you have earned?
	A.)  Plan A; $524.95
	B.) Plan B; $524.95
	C.) Plan B; $1,040.00
	D.) Plan A; $1,040.00

juicstice · Answer

this is the formula https://qrc.depaul.edu/StudyGuide2009/Notes/Savings%20Accounts/Compound%20Interest.htm

hero · Answer

Annual compound formula

$$A = P(1 + r)^n$$

P = start up amount
n = years
r = rate in decimal form

Simple interest
I = PRT

I = interest
P = principle
R = rate (in decimal form)
T = time in years

Plug in the values for both, then calculate