Lew has $3,600 that he wants to invest for 5 years.He can invest this amount at his credit union and earn 2.2 percent simple interest.Or, he can open an account at Compass Bank and earn 2.15 percent interest, compounded annually.If he decides to invest at Compass Bank for 5 years, he will:
A)earn $6 more than if he had invested with his credit union.
B)earn $8 more than if he had invested with his credit union.
C)earn the same amount as if he had invested with the credit union.
D)have a total balance of $3,680 in his account after one year.
E)have a total balance of $4,012 in his account after 5 years.

Question

Quizplus · Accepted Answer

The simple interest at the credit union is calculated as $3,600 * 0.022 * 5 = $396. The compound interest at Compass Bank is calculated using the formula $3,600 * (1 + 0.0215)^5 - $3,600, which results in approximately $404. Therefore, he earns $8 more at Compass Bank.

Lew Has $3,600 That He Wants to Invest for 5