SOLUTION: Paul made two investments: A: $4,000.00 at 4.5% compounded semi-annually, for 3 years; B: $3,500.00 at 5.2% simple interest, for 3 years. Which investment earns the highest in

Algebra ->  Finance -> SOLUTION: Paul made two investments: A: $4,000.00 at 4.5% compounded semi-annually, for 3 years; B: $3,500.00 at 5.2% simple interest, for 3 years. Which investment earns the highest in      Log On


   

Question 1199033: Paul made two investments:
A: $4,000.00 at 4.5% compounded semi-annually, for 3 years;
B: $3,500.00 at 5.2% simple interest, for 3 years.
Which investment earns the highest interest? By how much?
What is the total interest earned?
Answer by ikleyn(52787) About Me  (Show Source):
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Paul made two investments:
A: $4,000.00 at 4.5% compounded semi-annually, for 3 years;
B: $3,500.00 at 5.2% simple interest, for 3 years.
Which investment earns the highest interest? By how much?
What is the total interest earned?
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For the first compounded interest account, use the standard formula for the interest amount

    FV = 4000%2A%281%2B0.045%2F2%29%5E%283%2A2%29 - 4000


For the second simple interest account, use the standard formula for the interest amount

    FV = 3500*0.052*3.


Calculate each interest separately using your calculator.


Then answer your questions.

You are explained and instructed.

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On simple interest accounts,  see the lesson
    - Simple interest percentage problems
in this site.

On compounded interest accounts,  see the lesson
    - Compounded interest percentage problems
in this site.


Learn the subject from there.