Travis Has a Savings Account That His Parents Opened for Him

question 154

Multiple Choice

Travis has a savings account that his parents opened for him. It pays 6% annual interest. His uncle also opened an account for him, but it pays 12% annual interest. If there is $500 more in the account that pays 6%, and the total interest from both accounts is $129, how much money is in each of the accounts?

• A)$1,150 invested at 6%, $650 invested at 12%
• B)$1,044 invested at 6%, $544 invested at 12%
• C)$850 invested at 6%, $350 invested at 12%
• D)$1,141 invested at 6%, $641 invested at 12%
• E)$1,050 invested at 6%, $550 invested at 12%

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Definitions:

Cash Inflows

Money or assets that come into a company, typically through sales, financing, or investments.

NPV

Net Present Value, a calculation that represents the difference between the present value of cash inflows and the present value of cash outflows over a period of time.

Discount Rate

The interest rate that a central bank charges financial institutions for short-term loans, or used in discounted cash flow (DCF) analysis to present value future cash flows.

APR

The Annual Percentage Rate, which is the interest rate for a whole year on a loan, including fees.