The better deal would be simple interest rate of 3%
Step-by-step explanation:
In order to calculate which bank would be the better deal If Trsitam decides to deposit $7,000 for 4 years, we would have to make the following calculation:
simple interest rate of 3%.
Therefore, I= P*r*t
=$7,000*3%*4
I=$840
FV=
$7,000+$840
FV=7,840
compound interest rate of 2.5%
Therefore, FV=PV(1+r)∧n
FV=$7,000(1+0.25)∧4
FV=$17,089
The better deal would be simple interest rate of 3%
