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coldgirl [10]
3 years ago
15

Simply Savings Bank offers a simple interest rate of 10% per year. Compound Capital Bank offers an interest rate of 8% per year

compounded continuously. If Shakira plans to invest $200 for 5 years, which bank should she choose?
Mathematics
1 answer:
d1i1m1o1n [39]3 years ago
8 0

Answer:

She should choose the Simply Savings Bank, since she'll earn around 2 dollars more in comparison to the other bank.

Step-by-step explanation:

A simple interest rate account yields a return that follows the formula below:

return = C + C*r*t

Where C is the invested money, r is the interest rate and t is the elapsed time in years.

While a compound interest rate account yields a return that follows the formula below:

return = C*e^{r*t}

Therefore for the Simply Saving Bank she'll earn:

return_{1} = 200 + 200*0.1*5\\return_{1} = 200 + 100\\retrun_{1} = 300

While the Capital Bank she'll earn:

return_2 = 200*e^{0.08*5}\\return_2 = 200*e^{0.4}\\return_2 = 200*1.49182\\return_2 = 298.364

She should choose the Simply Savings Bank, since she'll earn around 2 dollars more in comparison to the other bank.

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