Lucas must decide how to invest $4,000. He can deposit the money in a savings account that pays a simple interest rate 5 1/4% annually, or Lucas can deposit the money in a CD account paying 4 1/2% compound in the account balances after 7 years?
At simple interest
A = 4000 + 4000(.0525)(7) = 4000 +1470 = $5470
At compound interest
A = 4000(1 + .045)^7 = $5443.45
