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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?

Guest Mar 7, 2017
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At simple interest

 

A = 4000 + 4000(.0525)(7)   = 4000 +1470  = $5470

 

At compound interest

 

A = 4000(1 + .045)^7  =   $5443.45

 

 

cool cool cool

CPhill  Mar 7, 2017

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