Question

Sergio has decided to diversify his investments in the following way:

$4,000 in an account earning 3.2% simple interest


$4,000 in a savings account earning 2.1% interest compounded annually


$7,500 in a certificate of deposit earning 5% interest compounded quarterly


How much total interest will Sergio earn on his investments at the end of 4 years?

Answer 1

d.$2,507.90 is the correct answer.

Answer 2

Future value of all investments
4,000×(1+0.032×4)+4,000
×(1+0.021)^(4)+7,500×(1
+0.05÷4)^(4×4)
=18,007.90

Total interest earned
18,007.90−(4,000
+4,000+7,500)
=2,507.90 ....answer