Question

Veronique and Lily compare their investment accounts to see how much they will have in the accounts after seven years. They substitute their values shown below into the compound interest formula. Compound Interest Accounts Name Principal Interest Rate Number of Years Compounded Veronique $1,000 5% 7 Once a year Lily $1,800 9% 7 Once a year A = P (1 + r) Superscript t Which pair of equations would correctly calculate their compound interests? Veronique: A = 1,000 (1 + 0.05) superscript 7, Lily: A = 1,800 (1 + 0.09) Superscript 7 Veronique: A = 1,000 (1 + 0.07) Superscript 5, Lily: A = 1,800 (1 + 0.07) Superscript 9 Veronique: A = 1,800 (1 + 0.05) Superscript 7, Lily: A = 1,000 (1 + 0.09) Superscript 7 Veronique: A = 1,000 (1 + 0.07) Superscript 5, Lily: A = 1,800 (1 + 0.07) Superscript 9

Answer 1

Answer:

Veronique: A = 1,000 (1 + 0.05) superscript 7, Lily: A = 1,800 (1 + 0.09) Superscript 7

Step-by-step explanation:

the equation used to calculate future value of an investment (or bank deposit) using compound interest is:

future value = present value x (1 + interest rate)ⁿ

• Veronique: future value = $1,000 x (1 + 5%)⁷ = $1,057
• Lily: future value = $1,800 x (1 + 9%)⁷ = $3,290.47