George is considering two different investment options. The first option offers 7.4% per year simple interest on the
initial deposit. The second option offers a 6.5% interest rate but is compounded quarterly. He may not withdraw any of
the money for three years after the initial deposit. Once the minimum 3 years is reached, he can choose to withdraw his
money or continue to collect interest. Suppose that George opens one of each type of account and deposits $10,000
into each.
Part A: Determine the value of the simple interest investment at the end of three years. Use the formula
A = P + Prt, where A represents the value of the investment, P represents the original amount, r represents the
rate, and t represents the time in years. Show your work.
Part B: Determine the value of the compound-interest investment at the end of three years. Use the formula
A=P(1+2) , where A represents the value of the investment, P represents the original amount, r represents
the rate compounded n times per year, and t represents the time in years.
Show your work.
Part C: Which investment is better over the first three years?
Explain your answer by using your work from Parts A and B as support.
Part D: How would you advise George to invest his money if he is unsure how long he will keep the money in the
account? Justify your reasoning using a graph or table.