Question

Ian invests $13,670 in a savings account at his local bank which gives 1.9% simple annual interest. He also invests $6,040 in an online savings account which gives 4.5% simple annual interest. After nine years, which one will have earned more interest, and how much more interest will it have earned, to the nearest dollar? a. The local account will have earned $7,521 more interest. b. The local account will have earned $3,199 more interest. c. The online account will have earned $3,090 more interest. d. The online account will have earned $109 more interest.

Answer 1

The formula says
I=prt
I Interest earned
P principle
R interest rate
T time

The interest earned of local account
13,670×0.019×9
=2,337.57

The interest earned of online account
6,040×0.045×9
=2,446.2

The difference
2,446.2−2,337.57
=109

So the answer is d

Answer 2

The one that will have earned more interest, and how much more interest will it have earned is: The online account will have earned $109 more interest.

Simple interest:

First step is to calculate the interest earned of local account

Interest=Principal× Interest rate ×Time

Interest=$13,670×0.019×9

Interest=$2,337.57

Second step is to calculate the interest earned of online account

Interest=Principal× Interest rate ×Time

Interest=$6,040×0.045×9

Interest=$2,446.2

Third step is to calculate the difference in interest earned

Difference=$2,446.2−$2,337.57

Difference=$109

Inconclusion the one that will have earned more interest, and how much more interest will it have earned is: The online account will have earned $109 more interest.

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