Deposits $3500 into each of two savings accounts account one earns 3% annual simple interest account two earns 3% interest compounded annually. Luke does not make any additional deposits or withdrawals. What is the sum of the balances of accounts one and account two at the end of four years a $7859.28 be $3920 C $3939.28 D $4359.28
For account one, the interest earned after 4 years is calculated using the formula: A = P(1 + rt), where A is the final balance, P is the principal deposit, r is the interest rate, and t is the time period.
Using this formula, the interest earned after 4 years in account one is: A = 3500(1 + (0.03)(4)) = 3500(1.12) = 3920.
Therefore, the balance in account one after 4 years is $3920.
For account two, the balance after 4 years is calculated using the formula: A = P(1 + r/n)^(nt), where A is the final balance, P is the principal deposit, r is the interest rate, n is the number of times interest is compounded per year, and t is the time period.
Using this formula, the balance in account two after 4 years is: A = 3500(1 + (0.03/1))^(1*4) = 3500(1.03)^4 = 3500(1.1255) = 3939.28.
Therefore, the balance in account two after 4 years is $3939.28.
The sum of the balances of accounts one and two at the end of 4 years is: 3920 + 3939.28 = 7859.28.
Therefore, the correct answer is A: $7859.28.