Ok so i honestly have no idea what this is so if you could help me out it would be great!!
Matthew will deposit $500 into an account earning 6.25% simple interest. Bodie will deposit $450 into an account earning 6.5% Compound interest. WHO has more money after 3 years?
A. Matthew has $50 more
B. Bodie has $43 more
C. Matthew has $93 more
D. Bodie has $450 more
To determine who has more money after 3 years, we need to calculate the amount of money each person will have in their respective accounts.
For Matthew, the equation to calculate the amount after 3 years using simple interest is:
Amount = Principal + (Principal * Interest Rate * Time)
For Bodie, the equation to calculate the compound interest is:
Amount = Principal * (1 + Interest Rate/100)^Time
Let's calculate the amount for each person step by step:
For Matthew:
Principal (P) = $500
Interest Rate (R) = 6.25% = 0.0625
Time (T) = 3 years
Amount = 500 + (500 * 0.0625 * 3)
= 500 + (500 * 0.1875)
= 500 + 93.75
= $593.75
So, after 3 years, Matthew will have $593.75 in his account.
For Bodie:
Principal (P) = $450
Interest Rate (R) = 6.5% = 0.065
Time (T) = 3 years
Amount = 450 * (1 + 0.065)^3
= 450 * (1.065)^3
≈ 450 * 1.204
≈ $542.80
So, after 3 years, Bodie will have approximately $542.80 in his account.
Now, let's compare the amounts:
Matthew has $593.75
Bodie has approximately $542.80
To find out the difference, we subtract Bodie's amount from Matthew's amount:
Difference = $593.75 - $542.80
= $50.95
So, Matthew has approximately $50.95 more than Bodie.
Out of the given options:
A. Matthew has $50 more -> Correct
B. Bodie has $43 more -> Incorrect
C. Matthew has $93 more -> Incorrect
D. Bodie has $450 more -> Incorrect
Therefore, the correct answer is A. Matthew has $50 more.