Question

I will make you Brianliest

Answer 1

Answer: B) Option 1, $510.00

Step-by-step explanation:

Step 1

We will determine the amount earned using option 1

Initial amount deposited into the account is $500 This means that the principal is P, so

P = 500

It was compounded annually. This means that it was compounded once in a year. So

n = 1

The rate at which the principal was compounded is 2%. So

r = 2/100 = 0.02

It was compounded for just a year. So

n = 1

The formula for compound interest is

A = P(1+r/n)^nt

A = total amount in the account at the end of t years. Therefore

A = 500 (1+0.02/1)^1×1

A = 500(1.02) = $510

Step 2

We will determine the amount earned using option 2

Initial amount deposited into the account is $500 This means that the principal is P, so

P = 500

It was compounded monthly. This means that it was compounded 12 times in a year. So

n = 12

The rate at which the principal was compounded is 2%. So

r = 2/100 = 0.02

It was compounded for just a year. So

n = 1

The formula for compound interest is

A = P(1+r/n)^nt

A = total amount in the account at the end of t years. Therefore

A = 500 (1+0.02/12)^12×1

A = 500(1.0017)^12 = 510.29

Approximately $510

Since option 2 has an annual fee of $1, the amount earned will be

510 - 1 = $509

She should choose option 1

She will have $510 in option 1