Suppose Kevin and Jill both deposit $4000 into their personal accounts. If Kevin’s account earns 5% simple interest annually and Jill’s earns 5% interest compounded annually, how much will each account balance show at the end of 5 years? Calculate the difference between each account.
If $640 is invested in an account that earns annual interest of 3.5%, compounded semiannually, what will the account balance be after 4 years? (Round your answer to the nearest cent.)
sierra deposits $500 into a new savings account that earns 5% interest compounded annually. if sierra makes an additional deposits or withdrawals, how many years will it take for the amount in her account to double?
To find the balance of Kevin's account at the end of 5 years, we can use the formula for simple interest:
Interest = Principal x Rate x Time
Kevin's account has a principal of $4000 and the interest rate is 5% per year. The time period is 5 years. Plugging these values into the formula, we get:
Interest = $4000 x 0.05 x 5 = $1000
The total balance in Kevin's account after 5 years will be the sum of the principal and the interest earned:
Total Balance = Principal + Interest = $4000 + $1000 = $5000
Now, let's calculate the balance in Jill's account using compound interest. The formula for compound interest is:
A = P(1 + r)^n
Where:
A = Total amount after interest
P = Principal (initial deposit)
r = Interest rate per period
n = Number of periods
In Jill's case, the principal is also $4000, the interest rate is 5% per year, and the time period is 5 years. Plugging these values into the formula, we get:
A = $4000(1 + 0.05)^5 = $4000(1.05)^5 ≈ $5255.63
Therefore, the balance in Jill's account at the end of 5 years will be approximately $5255.63.
To find the difference between each account, we subtract Kevin's balance from Jill's balance:
Difference = Jill's balance - Kevin's balance = $5255.63 - $5000 ≈ $255.63
The difference between Kevin's and Jill's account balances after 5 years is approximately $255.63.