Brian deposits $3,400 into each of two savings accounts.
Account I earns 3.5% annual simple interest.
Account II earns 3.5% interest compounded annually.
Brian does not make any additional deposits or withdrawals. What is the sum of the balances of Account I and Account II at the end of 6 years?
$8,293.47
$4179.47
$4,893.47
$11,693.47
To calculate the balance of Account I after 6 years, we use the formula for simple interest:
Balance = Principal + (Principal * Rate * Time)
Balance = $3,400 + ($3,400 * 0.035 * 6)
Balance = $3,400 + ($3,400 * 0.21)
Balance = $3,400 + $714
Balance = $4,114
Now, to calculate the balance of Account II after 6 years, we use the formula for compound interest:
Balance = Principal * (1 + Rate)^Time
Balance = $3,400 * (1 + 0.035)^6
Balance = $3,400 * (1.035)^6
Balance = $3,400 * 1.2244
Balance = $4,159.47
Therefore, the sum of the balances of Account I and Account II at the end of 6 years is $4,114 + $4,159.47 = $8,293.47.
So, the correct answer is $8,293.47.