Question

Nicolas has $650 to deposit into two different savings accounts. • Nicolas will deposit $400 into Account I, which earns 3.5% annual simple interest. • He will deposit $250 into Account II, which earns interest compounded annually. Nicolas will not make any additional deposits or withdrawals. Which amount is closest to the total balance of these two accounts at the end of 2 years? A $672.13 B $695.00 C $694.25 D $694.51 Mathematics

Answer 1

The initial amount is $650. The $400 is deposited in Account 1 with 3.5% annual simple interest. The $250 is deposited in Account 2 with 3.5% interest compounded monthly.
n = 2 years
Account 1: Simple Interest

F = P (1+rn)
   = 400 (1 +(0.035*2))
   = $428

Account 2: Compound Interest

F = P (1+i)^n
   = 250 ( 1+0.035)^2
F =  267.81

Total money after 2 years = $428 + $267.81
 T = $695.81