Question

Tyler has $1000 that he wants to put in a savings account. He wants to save the money for 6 years. After 6 years he plans to take the money out and spend it on college. He looks at two different banks, and they offer him different interest options.
Bank A offers Tyler 4% simple interest. Bank B offers Tyler 3% interest compounded annually. How much would Tyler’s investment be worth after 6 years in this account? Show your calculations below.

Answer 1

Bank B, because compound interest makes greater than simple interest.