Answer:
Step-by-step explanation:
Considering account 1, we would apply the formula for determining simple interest which is expressed as
I = PRT/100
Where
I represents interest paid on the amount of money deposited.
P represents the principal or amount of money deposited.
R represents interest rate on the deposit.
T represents the duration of the deposit in years.
From the information given,
P = $4500
R = 5%
T = 4 years
Therefore,
I = (4500 × 5 × 4)/100
I = $900
Total amount in account 1 is
4500 + 900 = 5400
Considering account 2, we would apply the formula for determining compound interest which is expressed as
A = P(1 + r/n)^nt
Where
A = total amount in the account at the end of t years
r represents the interest rate.
n represents the periodic interval at which it was compounded.
P represents the principal or initial amount deposited
From the information given,
P = $4500
r = 5% = 5/100 = 0.05
n = 1 because it was compounded once in a year.
t = 4 years
Therefore,
A = 4500(1 + 0.05/1)^1 × 4
A = 4500(1.05)^4
A = $5470
The sum of the balances of Account 1 and Account 2 at the end of 4 years is
5400 + 5470 = $10870
