Question

Livvi invests $19,430 in a savings account at her local bank which pays 1.8% simple annual interest. She also deposits $16,470 in an online savings account which pays 2.7% simple annual interest. After six years, which account will yield more interest, and approximately how much more interest will it yield?

Answer 1

Simple interests means that interests are not compounded.

1) $19430 * 1.8 % = $349.74 per year

6 years => $349.74*6 = $2098.44

2) $ 16470 * 2.7% = $ 444.69 per year

6 years => $444.69 * 6 = $2668.14

3) Find the difference: $2668.14 - $2098.44 = $569.7

Then the second account will yield $569.7 more interest than the first one.