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.

Accepted Solution

Answer:The first account earns an interest of $511.11Step-by-step explanation:a). Interest in the first accountThe total amount of interest earned in 10 years can be expressed as;Compound interest=(P(1+r/n)^nt)-PWhere;P=Principal amountr=Interest raten=number of times the interest is compounded annuallyt=number of years the account is keptIn our case;P=$900r=4.6/100=0.046n=1t=10 yearsReplacing;Compound interest=900(1+0.046/1)^(1Γ—10)-(900)Compound interest=900(1.046)^10-(900)Compound interest=1,411.105-900Compound interest=$511.105Nearest cent=1/100=0.01 two decimal places511.105=511.11The first account earns an interest of $511.11