Answer:
Step-by-step explanation:
Considering account I, 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 = $1600
r = 2.75% = 2.75/100 = 0.0275
n = 1 because it was compounded once in a year.
t = 2 years
Therefore,
A = 1600(1 + 0.0275/12)^1 × 2
A = 1600(1.0275)^2
A = $1689.21
Considering account II, we would apply the formula for determining simple interest which is expressed as
I = PRT/100
Where
I represents interest paid on the investment.
P represents the principal or amount invested
R represents interest rate
T represents the duration of the investment in years.
From the information given,
P = 1600
R = 3.5
T = 2 years
I = (1600 × 3.5 × 2)/100 = $112
Total balance after 2 years is
112 + 1600 = $1712
the difference between the two accounts after 2 years is
1712 - 1689.21 = $22.79
