Answer:
$5,612.16
Step-by-step explanation:
Part 1) Account I earns 4% annual simple interest.
we know that
The simple interest formula is equal to
where
A is the Final Investment Value
P is the Principal amount of money to be invested
r is the rate of interest
t is Number of Time Periods
in this problem we have
substitute in the formula above
Part 2) Account II earns 4% interest compounded annually.
we know that
The compound interest formula is equal to
A=P(1+rt)
where
A is the Final Investment Value
P is the Principal amount of money to be invested
r is the rate of interest in decimal
t is Number of Time Periods
n is the number of times interest is compounded per year
in this problem we have
t=3 years
p=$2,500
r=4%=4/100=0.04
substitute in the formula above
A=2,500(1+0.04 * 3)
A=2,500 (1.12)
A=$2,800
Part 3) What is the sum of the balances of Account I and Account II at the end of 3 years?
Sum the two final investment
$2,800 + $2,812.16 = $5.612.16
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