With a principal investment of $19,200, which account will have the greatest value after 5 years?

simple interest: I = P • r • t
interest compounded annually is A = P (1 + r)t
interest compounded quarterly: A = P (1 + r/4 )4t

A.
3.6% with interest compounded annually

B.
3.8% in a simple interest account

C.
3.4% with interest compounded annually

D.
3.2% with interest compounded quarterly

Question

With a principal investment of $19,200, which account will have the greatest value after 5 years?

simple interest: I = P • r • t
interest compounded annually is A = P (1 + r)t
interest compounded quarterly: A = P (1 + r/4 )4t
 
 
 A.
3.6% with interest compounded annually
 
 B.
3.8% in a simple interest account
 
 C.
3.4% with interest compounded annually
 
 D.
3.2% with interest compounded quarterly

raffle_snaffle · Answer

What do you think?

raffle_snaffle · Answer

Describe to me what the difference is between simple and compound interest?

directrix · Answer

Take the first option and use it to crank out the interest with the given data of 

P = 19 200  and t = 5 years

Option A Test:  A. 3.6% with interest compounded annually

interest compounded annually is A = P (1 + r)^t

A = 19 200 ( 1 + .036)^5

A = $ 4535 interest 

Total amount after 5 years is 19 200 + 4 535 = ?

After doing that, move on to check the total amounts for other 3 options.

@OpenStudier0