Answered

Westonci.ca offers fast, accurate answers to your questions. Join our community and get the insights you need now. Discover detailed solutions to your questions from a wide network of experts on our comprehensive Q&A platform. Discover in-depth answers to your questions from a wide network of professionals on our user-friendly Q&A platform.

2. Lorena is trying to choose between two different savings accounts at H-Town Bank. She will deposit $3,500 dollars and will leave the money in the account for 12 years. There will be no additional money deposited or withdrawn from the account.​

Sagot :

Answer:

First of all, this question is not complete. So, we will be hypothetically create two accounts and try to choose the one with the greater profit.

Choice 1 = X = Final Amount after 12 years = $5600

Choice 2 = Y = Final Amount after 12 years = $6285.50

Hence, Lorena should choose choice 2, as it gives more profit over than choice 1.

Step-by-step explanation:

First of all, this question is not complete. So, we will be hypothetically create two accounts and try to choose the one with the greater profit.

Initial Deposit Amount = $3500

Time period = 12 years

Let's Suppose Lorena has two X and Y choices of accounts at H-town Bank.

X = simple interest of 5% over the initial amount for 12 years.

Y = Compound interest 5% over the initial amount for 12 years.

Solution:

Let's calculate the profit for choice 1 = X

Simple interest = 5%

Initial amount = $3500

Time period = 12 years

Formula = A = P (1 + rt)

where, A = Final amount after 12 years

t = time period in years  = 12

P = initial amount to be deposited = $3500

r = annual interest rate = 5%

Plug in the values to get the total amount.

A = 3500(1+0.05x12)

A = $5600 = final amount Lorena will get after 12 years.

Let's calculate the profit for choice 2 = Y

Compound interest = 5%

Initial amount = $3500

Time period = 12 years

Formula = A = P [tex](\frac{r}{n} + 1)^{nt}[/tex]

where,

A = Final amount after 12 years

t = time period in years  = 12

P = initial amount to be deposited = $3500

r = annual interest rate = 5%

n = number of times interest rate is applied or compounded. = 12

Plug in the values to get the total amount.

A = P [tex](\frac{r}{n} + 1)^{nt}[/tex]

A = $6285.50

Hence, Lorena should choose choice 2, as it gives more profit over than choice 1.

We hope you found what you were looking for. Feel free to revisit us for more answers and updated information. We appreciate your time. Please revisit us for more reliable answers to any questions you may have. Westonci.ca is your trusted source for answers. Visit us again to find more information on diverse topics.