The total balance of these two accounts at the end of 2 years is $695.50. So, Option B is correct.
The total amount deposit is $650. Nicolas will deposit $400 into Account I, which earns 3.5% annual simple interest. He will deposit $250 into Account II, which earns interest compounded annually.
What is compound interest?
Compund interest is defined as the addition of interest to the principal amount. It can be calculated by
[tex]\rm CI = P(1+\frac{r}{n} )^{nt}[/tex]
where P is the principal amount and r is the rate of interest, t is time period.
Account I
Simple interest, SI = P × R × T/100
= $400 × 0.035 × 2
= $28
$28 interest earned so total = $400 + $28 = $428
Account II
[tex]\rm CI = P(1+\frac{r}{n} )^{nt}[/tex]
= $250 (1+0.035)^2
= 267.50
Total balance of these two accounts
$428 + $267.81 = $695.50
Hence, total balance of these two accounts at the end of 2 years is $695.50. So, Option B is correct.
Learn more about compound interest;
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