## Sumaya is considering investing $8500 into the bank. Bank A offers 2.25% interest rate compounded semiannually. Bank B offers 1.75% interest Question Sumaya is considering investing$8500 into the bank. Bank A offers 2.25% interest rate compounded semiannually. Bank B offers 1.75% interest compounded monthly.
She is planning on leaving the money in the account for 5 years until she goes to college.

Which bank should Sumaya go with and how much more will she make at that bank in the five years?

A. Bank A – she will make $1341.56 more B. Bank B – she will make$1341.56 more.

C. Bank A – she will make $230.02 more. D. Bank B – she will make$230.02 more.

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6 months 2021-08-04T08:51:20+00:00 1 Answers 19 views 0

C. Bank A – she will make $230.02 more. Step-by-step explanation: The account balance at each bank can be computed from … A = P(1 +r/n)^(nt) where principal P is invested at annual rate r compounded n times per year for t years. Bank A Sumaya’s balance after 5 years will be … A = 8500(1 + 0.0225/2)^(2·5) = 9506.14 Bank B Sumaya’s balance after 5 years will be … A = 8500(1 +0.0175/12)^(12·5) = 9276.67 __ The balance at Bank A is larger by … 9506.14 -9276.67 = 229.47 The closest answer choice is … C. Bank A – she will make$230.02 more