Investment is the allocation of excess funds in those avenues that provide returns over the time period. The investment can be in the form of money deposited in the bank as fixed deposits, purchases of shares, bonds, commodities, or real estate.
Account B will earn the customer a greater amount of interest as compared to account A.
Calculation:
As the term of investment in both account is not the same, therefore the effective interest rate for each year need to be determined.
Account A:
[tex]\begin{aligned}\text{Interest rate per year}&=\frac{\text{Interest rate}}{\text{terms of investment}}\\&=\frac{8\%}{8\;\text{years}}\\&=1\%\end{aligned}[/tex]
Account B:
[tex]\begin{aligned}\text{Interest rate per year}&=\frac{\text{Interest rate}}{\text{terms of investment}}\\&=\frac{7\%}{10\;\text{years}}\\&=0.7\%\end{aligned}[/tex]
The interest amount of account B will compound on yearly basis, but the interest amount of account A will not compound.
Thus, based upon the power of compounding account B will provide higher earnings.
To know more about the interest of investment, refer to the link:
https://brainly.com/question/14019511
