Shannon put $ 7,000 in a 5 year CD that paid 8% interest per year. Malcolm put $6,000 in a 5 year CD that paid 10% interest. What was the balance of each person's account at the end of the 5 years? Who made more money and how much more did they make? (Use I= PRT Where I= interest, R= rate, and T=time in years
Please help me what I have try so far is
Shannon Malcolm
I = P R T I = P R T
8%= 7,000(5) 10% 6,000(5)
but still i couldn't understand
Your formula means
Interest earned = Principal * interest Rate * Time in years
Interest Rate is the decimal rate. 8% = 0.08
So
I = 7,000 * .08 * 5 = 2800
so at the end of 5 years Shannon has
7,000 + 2,800 = $9,800
Now I think you can do Malcolm
thank you for your help
To find the balance of each person's account at the end of 5 years, we can use the formula for compound interest: A = P(1 + r/n)^(nt), where A is the ending balance, P is the principal (initial amount), r is the interest rate, n is the number of times the interest is compounded per year, and t is the time in years.
For Shannon:
Principal (P) = $7,000
Interest rate (r) = 8% or 0.08 (in decimal form)
Number of times compounded per year (n) = 1
Time (t) = 5 years
Using the formula:
A = 7,000(1 + 0.08/1)^(1*5)
A = 7,000(1 + 0.08)^5
A = 7,000(1.08)^5
A = 7,000(1.46933)
A = $10,285.31
Therefore, Shannon's balance at the end of 5 years would be $10,285.31.
For Malcolm:
Principal (P) = $6,000
Interest rate (r) = 10% or 0.1 (in decimal form)
Number of times compounded per year (n) = 1
Time (t) = 5 years
Using the formula:
A = 6,000(1 + 0.1/1)^(1*5)
A = 6,000(1 + 0.1)^5
A = 6,000(1.1)^5
A = 6,000(1.61051)
A = $9,663.07
Therefore, Malcolm's balance at the end of 5 years would be $9,663.07.
To determine who made more money and how much more, we can find the difference in the balances:
Difference in balance = Shannon's balance - Malcolm's balance
Difference in balance = $10,285.31 - $9,663.07
Difference in balance = $622.24
Therefore, Shannon made $622.24 more than Malcolm.