Question 1

XYZ just deposited $3,500 in an account that will earn 7.2 percent per year in compound interest for 8 years. If Jelena deposits $4,000 in an account in 3 years that earns simple interest, then how much simple interest per year must Jelena earn to have the same amount of money in 8 years from today as XYZ will have in 8 years from today?

a. 6.58% (plus or minus .02 percentage points)

b. 10.52% (plus or minus .02 percentage points)

c. 8.82% (plus or minus .02 percentage points)

d. 12.02% (plus or minus .02 percentage points)

e. None of the above is within .02 percentage points of the correct answer