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Algebra

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Compound Interest or Simple Interest?

ALGEBR-CVFBBY

You bought a lottery ticket and ended up winning $\$20,000$! You have decided to use it for college for one of your kids. You only have $6$ years before they attend college.

You call the bank and are offered a simple interest investment at $4$% interest, or a compound interest investment at $3$% that compounds quarterly. After $6$ years, you will withdraw the entire amount for college.

How much would each investment account make after $6$ years?

A

Simple interest: $\$24,000$
Compound interest: $\$23,400$

B

Simple interest: $\$24,800$
Compound interest: $\$23,928$

C

Simple interest: $\$24,800$
Compound interest: $\$23,400$

D

Simple interest: $\$24,000$
Compound interest: $\$23,928$