Answer:
The amount of money you would earn more from your second City Bank account at the end of 12 years is $5,780.68
Explanation:
Initial Deposit = $14,000
Rate = 7%
Time = 12 Years
The formula to calculate the amount using simple interest is as follows -
PRT/100
Simple interest = ($14,000×0.07×12)
= $11,760
Total amount after 12 years = $14,000 + $11,760
$25,760
For Second city bank with compound interest, the future value formula will be used:
FV = PV(1 + r)t
where,
PV = $14,000
r = 7%
t = 12 years
FV = FV = $14,000(1.07)12
FV = $14,000 × 2.25
FV = $31,530.68
How much more you would earn more from your second City Bank account at the end of 12 years = $31,530.68 - $25,750
= $5,780.68