# Question below: This is a practice question for a bigger test, I need an explanation so I can understand. Thanks

George is considering two different investment options. The first option offers 7.4% per year simple interest on the initial deposit. The second option offers a 6.5% interest rate but is compounded quarterly. He may not withdraw any of the money for three years after the initial deposit. Once the minimum 3 years is reached, he can choose to withdraw his money or continue to collect interest. Suppose that George opens one of each type of account and deposits $10000 into each. Part A: Determine the value of the simple-interest investment at the end of three years. Use the formula A=P+Prt, where A represents the value of the investment, P represents the original amount, r represents the rate, and t represents the time in years. Part B: Determine the value of the compound-interest investment at the end of three years. Use the formula A=P(1+r/n)nt, where A represents the value of the investment , P represents the original amount, r represents the rate compounded n times per year, and t represents the time in years. Part C: Which investment is better over the first three years, why? Part D: How would you advise George to invest his money if he is unsure how long he will keep the money in the account. Justify your reasoning using a graph or table. I have most of my answers, but for some of them, I'm not sure if Im correct. I really need an explanation. ## 3 Answers By Expert Tutors By: Rada H. Thanks so much. I understand it much better now. I will correct my answers Report 03/10/20 Rada H. I have a question, for part A, did you put the wrong equation in, or that equation can also be used. I'm confused since the one provided for part A is actually A=P+Prt. But then how did you get the same answer as I did when I used a different equation Report 03/10/20 David G. How do you add a table to an answer? Report 03/10/20 David G. Also, she used A = P x (1 + r x t). When you distribute the P through the parenthesis, you end up with A = (P x 1) + (P x r x t) which is the same as A = P + Prt. Report 03/10/20 Rada H. Oh yeah, Distributive property. Thanks Report 03/10/20 Touba M. tutor I am happy, it was useful. Good luck Report 03/10/20 David G. answered • 03/10/20 Tutor 5 (2) Math, Science and Test Prep Tutor for All Ages Rada H. Hey, how is the original amount 1,000? Was it a mistake, the initial amount is 10,000 Report 03/10/20 David G. Yup, just updated the whole answer Report 03/10/20 Rada H. Ok thank you so much. Btw, the explanation was incredible. You totally helped me understand this. Report 03/10/20 A P. answered • 03/10/20 Tutor 4.9 (215) Proven, Effective Math and Science Tutor Rada H. For part A, 1 got 12220, I understood part A. For B I got 12134.08. I didnt really understand part C, and for D, Im still trying on the table or graph Report 03/10/20 Touba M. tutor That"s enough you watch the table. if he invests yearly ,$10000, by simple interest, part1, and compound interest, Part2, you figure out which number is going higher and higher. Albeit, increasing will happen after 6th year. your advice to him is if he doesn't know how long .... the best is compound interest. Good Luck
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03/12/20

Thank you so much, I appreciate it.
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03/14/20

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