A bank offers two interest account plans. Plan A gives you 6% interest compounded annually. Plan B gives you 13% annual simple interest. You plan to invest 2,000 for the next 4 years. Which account earns you the most interest (in dollars) after 4 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
Am I Correct? Please Help
Here is to all the ppl who need help!
1.A
2.B
3.D
4.C
5.C
6.C
7.sorry can’t help ya out with this one ;(
its C
Did you even look at my reply to your same question which you posted less than 1 hour ago ?
http://www.jiskha.com/display.cgi?id=1428346534
To determine which account earns you the most interest after 4 years, we can calculate the interest earned for each plan and compare the results.
For Plan A, the interest is compounded annually at a rate of 6%. To calculate the interest earned after 4 years, we can use the formula:
A = P(1 + r/n)^(nt)
Where:
A = the future value of the investment (including interest)
P = the principal amount (initial investment)
r = the annual interest rate (as a decimal)
n = the number of times that interest is compounded per year
t = the number of years
Using the values given, let's calculate the interest earned with Plan A:
P = $2,000
r = 6% or 0.06
n = 1 (since the interest is compounded annually)
t = 4
A = 2000(1 + 0.06/1)^(1*4)
A ≈ $2,509.44
Therefore, with Plan A, you would have earned approximately $2,509.44 after 4 years.
On the other hand, for Plan B, the interest is simple interest and is calculated using the formula:
I = P * r * t
Where:
I = the interest earned
P = the principal amount (initial investment)
r = the annual interest rate (as a decimal)
t = the number of years
Using the values given, let's calculate the interest earned with Plan B:
P = $2,000
r = 13% or 0.13
t = 4
I = 2000 * 0.13 * 4
I = $1,040.00
Therefore, with Plan B, you would have earned $1,040.00 in interest after 4 years.
Comparing the results, we see that the answer is option b) Plan B, $524.95. This option matches the amount of interest you would earn with Plan B.