Question

2.

Answer 1

Option b is my guess because it sounds more reasonable

Answer 2

Answer:

Option A.

Explanation:

You would use the equation $A = P(1+\frac{r}{n}) ^{nt}$. A is your final value, r is the interest rate (0.07 for the 7% interest rate), n is how many times it is compounded annually, and t is the amount of years. (edit) I forgot to clarify that P is the starting value, which is $4000 in this case.

Compare the two final values, Option A is $5659.11, Option B is $6138.75.

Option A is correct because it is cheaper.