Mrs Yang deposited $12 000 in Bank A that pays 2% per annum simple interest. She also deposited the same amount in Bank B that pays 1.95% per annum compound interest compounded monthly. Find the total amount of money she will receive from the two banks at the end of 3 years.

You want the total amount in two accounts at the end of 3 years when each starts with $12,000. One earns 2% annual simple interest; the other earns 1.95% annual interest compounded monthly.

Compound interest

The formula for the amount of an investment earning compound interest is ...

A = P(1 +r/n)^(nt)

where interest at rate r is compounded n times per year for t years.

Here, we have ...

A = $12,000(1 +0.0195/12)^(12·3) ≈ $12,722.34

Simple interest

The amount in an account earning simple interest is ...

A = P(1 +rt)

A = $12000(1 +0.02·3) = $12,720.00

Total

The total amount in the two investments after 3 years is ...

$12,722.34 +12,720 = $25,442.34

<95141404393>

Mrs Yang deposited $12 000 in Bank A that pays 2% per annum simple interest. She also deposited the same amount in Bank B that pays 1.95% per annum compound interest compounded monthly. Find the total amount of money she will receive from the two banks at the end of 3 years.​

Respuesta :

Compound interest

Simple interest

Total

Otras preguntas

Mrs Yang deposited $12 000 in Bank A that pays 2% per annum simple interest. She also deposited the same amount in Bank B that pays 1.95% per annum compound interest compounded monthly. Find the total amount of money she will receive from the two banks at the end of 3 years.