Answer:Please refer to the explanation section
Explanation:
The question is incomplete. We do not have the rate interest for both accounts. We also do not know how much is invested in each account. The question also has a typo, the question says "he invested some of it in an account that paid simple interest per year and invested the rest in an account that paid simple interest per year". We will make some assumption in order to provide a proper solution to this question
Assumptions:
Firstly we will assume he invested in a simple interest account and a compound interest account. assume
The total investment is $1000. $5000 is invested in each account.
Therefore the Present Value (PV) is $5000 for both accounts
Interest rate (R) is 10% per year for simple interest and 10% per per year Compounded monthly for compound interest account
Period (n) = 1 year
Simple Interest Account
Future Value (Simple Interest) = P(1 + Rn)
Future Value (Simple Interest) = $5000(1 + 0.10 x 1) = $5500
Interest from Simple interest account = 5500 - 5000 = $500
Compound interest Account
Future Value (Compound interest) = P(1 + R)^n
Future Value (Compound interest) = $5000(1 + 0.10/12)^12 = 5523.565337
Interest form Compound interest account = 5523.57 - 5000 = $523
compound interest account earned more interest than Simple interest Account
