Lester deposited $400 into a savings
account earning 4.5% simple interest, and
$450 into an investment account earning
3.2% interest compounded annually. What
was the total interest he earned in 3 years?
A $986.00
B $89.06
C $9.60
D $98.60
simple for 3 years
.045 * 3 = .135
.135 * 400 = 54
compounded for three years
1.032^3 - 1 = .0991
.0991 * 450 = 44.60
54 + 44.60 = 98.60
Mooching? That kinda sounds fancy. Adding that to my vocab list. I try but I'm terrible at interest. I needed help ASAP cause I hate math. So sorry for, er, mooching the questions...but I have too :(
To find the total interest earned by Lester in 3 years, we need to calculate the interest earned on each account separately and then add them together.
First, let's calculate the interest earned on the savings account. The formula for simple interest is:
Simple Interest = Principal × Rate × Time
The principal is $400, the rate is 4.5% (or 0.045 in decimal form), and the time is 3 years. Plugging these values into the formula:
Simple Interest = $400 × 0.045 × 3 = $54
So, the interest earned on the savings account is $54.
Next, let's calculate the interest earned on the investment account. The formula for compound interest is:
Compound Interest = Principal × (1 + Rate)^Time - Principal
The principal is $450, the rate is 3.2% (or 0.032 in decimal form), and the time is 3 years. Plugging these values into the formula:
Compound Interest = $450 × (1 + 0.032)^3 - $450 = $47.06
So, the interest earned on the investment account is $47.06.
Finally, we add the interest earned on both accounts together to find the total interest earned by Lester:
Total Interest = $54 + $47.06 = $101.06
Therefore, the correct answer is not listed among the options provided.