7
QuizMultiple Choice
Modeling with Functions
Question 7 of 10 • EAP-Algebra Functions and Data Analysis B
Tasha invests $5,000 at 6% annual interest and an additional $5,000 at 8% annual interest. Thomas invests $10,000 at 7% annual interest. Which statement accurately compares Tasha’s and Thomas’s investments if interest is compounded annually?Compound interest formula: t = years since initial depositn = number of times compounded per yearr = annual interest rate (as a decimal)P = initial (principal) investmentV(t) = value of investment after t years
Answer
A
Each person will have exactly the same amount over time because each invested $10,000 at an average interest rate of 7%.B
Tasha’s investment will yield more over many years because the amount invested at 8% causes the overall total to increase faster.C
Thomas’s investment will yield more from the start because he has more money invested at the average percentage rate.D
Tasha’s investment will yield more at first because she invested some at a higher rate, but Thomas’s investment will yield more over the long run.