Question

Sal and Aleah were investing money into two different accounts. They both invested $250 each. Sal invested into an account at an annual interest rate of 3.5% compounded monthly and Aleah invested into an account that had an annual interest rate of 3.7% compounded quarterly. Which statement below best describes the two accounts after 5 years?

Answer 1

Answer:

$297.74 on Sal's account. (Interest = $47.74) ; $300.55 on Aleah's account. (Interest = $50.55)

Step-by-step explanation:

Sal:

P = $250.00;

r = 3.5% annual interest, compounded monthly;

n = 12

t = 5 years

$A=P(1+\frac{r}{n})^{nt}$

$A=250(1+\frac{0.035}{12})^{12*5}$ = $297.74 amount of money on Sal's account after 5 years. (Interest = $47.74)

Aleah:

P = $250.00

r = 3.7% annual interest, compounded quarterly;

t = 5 years

n = 4

$A=P(1+\frac{r}{n})^{nt}$

$A=250(1+\frac{0.037}{4}) ^{4*5}$ = $300.55 amount of money on Aleah's account after 5 years. (Interest = $50.55)