Answer:
$5
Explanation:
The value of investment after two years of investment by Tim can be calculate using the following formula:
Value of investment= P(1+i)^n
n=number of years=2
i=annual interest=10%
P= amount invested by Tim initially=$1,000
value of investment=1,000(1+10%)^2
=1,000(1.21)
=1,210
Interest earned by tim over the two years=1,210-1,000=210
The value of investment after two years of investment by Lana can be calculate using the following formula:
Value of investment= P(1+i)^n
n=number of years=2
i=annual interest=5%
P= amount invested by Lana initially=$2,000
value of investment=2,000(1+5%)^2
=1,000(1.1025)
=2,205
Interest earned by Lana over the two years=2,205-2,000=205
Excess interest earned by Tim over Lana=210-205=$5
