Investment X gives a greater amount of $50.40 over a period of two years
Investment X:
Principal amount invested = $6000
Time in years = 2 years
Rate of interest = 4.5%
Type of interest: Simple
Finding the interest using the formula for simple interest:
Simple interest = P*R*T/100
where P = principal invested
R = rate of interest
T = time in years
Substituting the values we get:
Simple interest = 6000*4.5*2/100
= $540
Investment Y:
Principal amount = $6000
Time in years = 2 years
Rate of interest = 4%
Finding the interest using the formula
Compound interest = P(1+r/100)^n - P
where P = principal amount invested
r = rate of interest
n = number of years
Substituting the values in the formula we get:
Compound interest = 6000(1+4/100)^2-6000
= (6000*1.0816)-6000
=$489.6
So, the difference in amount = 540-489.6 = $50.40
Learn more about compound interest:
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