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22 February, 12:15

Huan deposited $900 into a college savings account earning 4.6% interest compounded annually. He also deposited $900 into a second account earning 4.6% simple interest. He made no additional deposits. Part 1 out of 3 How much interest does the first account earn in 10 years? If necessary, round to the nearest cent.

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  1. 22 February, 13:57
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    The first account earns an interest of $511.11

    Step-by-step explanation:

    a). Interest in the first account

    The total amount of interest earned in 10 years can be expressed as;

    Compound interest = (P (1+r/n) ^nt) - P

    Where;

    P=Principal amount

    r=Interest rate

    n=number of times the interest is compounded annually

    t=number of years the account is kept

    In our case;

    P=$900

    r=4.6/100=0.046

    n=1

    t=10 years

    Replacing;

    Compound interest=900 (1+0.046/1) ^ (1*10) - (900)

    Compound interest=900 (1.046) ^10 - (900)

    Compound interest=1,411.105-900

    Compound interest=$511.105

    Nearest cent=1/100=0.01 two decimal places

    511.105=511.11

    The first account earns an interest of $511.11
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