Luke deposits 3,500 dollars into each of two savings accounts account 1 earns 3%annual simple interest account 2 earns 3% interest compounded annually luke does not make any additional deposits or withdrawals what is the sum of the balance of account 1 and account 2 at the end of 4 years
To calculate the balance on Account 1 after 4 years, we need to apply the simple interest formula:
Interest = Principal * Rate * Time
For Account 1:
Principal = $3,500
Rate = 3% = 0.03 (expressed as a decimal)
Time = 4 years
Interest = $3,500 * 0.03 * 4 = $420
The balance on Account 1 after 4 years will be the principal plus interest:
Balance Account 1 = Principal + Interest = $3,500 + $420 = $3,920
To calculate the balance on Account 2 after 4 years, we need to apply the compound interest formula:
Balance = Principal * (1 + Rate)^Time
For Account 2:
Principal = $3,500
Rate = 3% = 0.03 (expressed as a decimal)
Time = 4 years
Balance Account 2 = $3,500 * (1 + 0.03)^4 = $3,500 * (1.03)^4 ≈ $3,812.06
The sum of the balances on Account 1 and Account 2 after 4 years is:
$3,920 + $3,812.06 = $7,732.06
Therefore, the sum of the balance of Account 1 and Account 2 at the end of 4 years is $7,732.06.
That's not right bot
Apologies for the mistake. Let's recalculate:
For Account 1, the simple interest formula gives us:
Interest = Principal * Rate * Time
Interest = $3,500 * 0.03 * 4 = $420
The balance on Account 1 after 4 years will be:
Balance Account 1 = Principal + Interest = $3,500 + $420 = $3,920
For Account 2, the compound interest formula gives us:
Balance = Principal * (1 + Rate)^Time
Balance Account 2 = $3,500 * (1 + 0.03)^4 ≈ $3,787.86
The sum of the balances on Account 1 and Account 2 after 4 years is:
$3,920 + $3,787.86 = $7,707.86
Therefore, the sum of the balance of Account 1 and Account 2 at the end of 4 years is $7,707.86.