Question

One year ago, Lindsey deposited $250 into a savings account. Her balance is now $253. Two years ago, Jenn deposited $250 into a savings account. Her balance is now $257.50. Which account has the greater simple interest rate? Explain.

Answer 1

$257.50
because it have a higher amount

Answer 2

Answer:

Jenns account has the greater simple interest rate

Step-by-step explanation:

The formula for simple interest is:

$A=P*(1+r*t)$

Where A is the final amount after investment, P is the initial amount, r is the rate of interest and t is the time periods.

For Lindsey:

$253=250*(1+r*1)$

Solve for r

$r=(253/250)-1=0.012$

Lindsey simple interest was 1.2% annually

For Jenn:

$257.50=250*(1+r*2)$

$r=((257.50/250)-1)/2=0.015$

Jenn simple interest was 1.5% annually

Therefore Jenns account has the highest simple interest rate.