Aimee Walters has a choice for her investment of $4,000. She can invest it in either (a) an account that pays 10% with compound interest for 2 years or (b) an account that pays 10% with simple interest for 2 years. Find the future value of both. Which is larger? A. The simple interest account earns $400 more in two years than the compound interest account.

B. The compound interest account earns $40 more in two years than the simple interest account.

C. The simple interest account earns $40 more in two years than the compound interest account.

D. The compound interest account earns $400 more in two years than the simple interest account.

Question 2

The Lee family plans to buy a new house in 2 years and wants to make a down payment of 25% of the estimated purchase price of $175,000. Find the amount they need to invest to make the down payment if funds earn 12% compounded semiannually.

A. $43,750
B. $34,653.94
C. $125,961.20
D. $138,615.75