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Cameron has decided to diversify his investments in the following way:
$3,000 in an account earning 2.7% simple interest
$5,000 in a savings account earning 1.8% interest compounded annually
$5,000 in a certificate of deposit earning 3.9% interest compounded quarterly
How much total interest will Cameron earn on his investments at the end of 3 years?

a. $530.87
b. $665.57
c. $973.30
d. $1,135.30


Anyone know how to do this?

Answer :

yelixacastillo2
No le entendí pero me ayudes a otros porque no tengo nadar
Mathunga

Answer:

D.) $1,135.30 at the end of 3 years

Explanation:

First method:

Formula for simple interest is I = P * R * T.

In this instance P = 3,000, R = 2.7, T = 5.

[tex]I=(3000)(0.027)(5)\\= $405[/tex]

Second method:

The formula for annual compounding is [tex]A=P(1+r)^t[/tex], where A = amount, P = principal (initial) amount, r = rate of growth, t = years.

[tex]A=5000(1+0.027)^3[/tex]

=[tex]5416.0334[/tex]

Third method:

The formula for periods within a year is [tex]A=P(1+\frac{r}{n})^n^t[/tex]. There is now the added value of n (number of periods per year). Since there are 3 quarters per year, n will be 4.

[tex]A=5000(1+\frac{0.039}{4})^4^*^3\\=5000(1.00975)^1^2\\= 5617.4129[/tex]

Sum after 3 years is $1,135.30

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