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23 October, 23:38

Linda deposits $1,800 into an account that pays 7.5% interest, compounded annually. Anna deposits $4,000 into an account that pays 5% interest, compounded annually. If no additional deposits are made to either account, what is the balance of each at the end of 10 years? (to the nearest dollar)

A) Linda's account: $3,710

Anna's account: $6,516

B) Linda's account: $2,315

Anna's account: $5,860

C) Linda's account: $2,647

Anna's account: $6,102

D) Linda's account: $3,150

Anna's account: $4,200

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Answers (1)
  1. 23 October, 23:52
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    A is your answer because Since the interest is compounded annually, the balances grow exponentially.

    , A = P (1 + r/n) nt

    Linda = 1800 (1 + 0.075) 10 = ≈ $3,710

    Anna = 4000 (1 + 0.05) 10 = ≈ $6,516
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