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 3 at the end of 4 years
For account 1, the simple interest is calculated using the formula:
Interest = Principal * Rate * Time
Where:
Principal = $3,500
Rate = 3% = 0.03
Time = 4 years
Interest = 3500 * 0.03 * 4 = $420
The balance at the end of 4 years for account 1 is:
Balance = Principal + Interest = 3500 + 420 = $3,920
For account 2, the compound interest is calculated using the formula:
Balance = Principal * (1 + Rate)^Time
Where:
Principal = $3,500
Rate = 3% = 0.03
Time = 4 years
Balance = 3500 * (1 + 0.03)^4 ≈ $3,805.37
Therefore, the sum of the balances of account 1 and 2 at the end of 4 years is:
3920 + 3805.37 ≈ $7,725.37