Q:

Linda deposits $1,800 into an account that pays 7.5% interest, compounded annually. Anna deposits $4,000 into an account that pays 5% interest, compounded annually. If no additional deposits are made to either account, what is the balance of each at the end of 10 years? (to the nearest dollar)A) Linda's account: $3,710Anna's account: $6,516 B) Linda's account: $2,315Anna's account: $5,860 C) Linda's account: $2,647Anna's account: $6,102 D) Linda's account: $3,150Anna's account: $4,200

Accepted Solution

A:
Answer:A is your answer because Since the interest is compounded annually, the balances grow exponentially.   ,A = P( 1 + r/n)nt Linda = 1800(1 + 0.075)10 = ≈ $3,710 Anna = 4000( 1 + 0.05)10 = ≈ $6,516