## Tasha invests \$5000 annually at 6% and an additional \$5000 annually at 8%. Thomas invests \$10000 annually at 7%. Which statement accurately

Question

Tasha invests \$5000 annually at 6% and an additional \$5000 annually at 8%. Thomas invests \$10000 annually at 7%. Which statement accurately compares the two investments if interest is compounded annually

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2 weeks 2021-09-12T04:24:03+00:00 2 Answers 0

Option B is correct.

Step-by-step explanation:

We will compare the interest earned by both.

Tasha: p = \$5000

r = 6% or 0.06

n = 1

So, Amount after a year will be = = \$5300

And amount the next year with p = 5300: 5300*1.06= \$5618

Here the amount will be = =5400

Next year amount with p = 5400 : 5400*1.08 = \$ 5832

Amount in total Tasha will have in 2 years = 5618+5832 = 11450

Thomas:

p = 10000

r = 7% or 0.07

n = 1

After a year the amount will be = =\$10700

Amount Next year with p = 10700 : 10700*1.07 = \$11449

*****Just after 1 year we can see that Tasha’s total amount is high than Thomas. This means at the same consistent rate, each year Tasha’s amount will always be higher than Thomas.

So, option B is correct. Tasha’s investment will yield more over many years because the amount invested at 8% causes the overall total to increase faster.