Answer: $59
Step-by-step explanation:
Considering the account that earns simple interest, we would apply the formula for determining simple interest which is expressed as
I = PRT/100
Where
I represents interest paid on the amount of money deposited.
P represents the principal or amount of money deposited.
R represents interest rate on the deposit.
T represents the duration of the deposit in years.
From the information given,
P = $150
R = 4%
T = 20 years
Therefore,
I = (150 × 4 × 20)/100
I = $120
Considering the account that earns compound interest, we would apply the formula for determining compound interest which is expressed as
A = P(1 + r/n)^nt
Where
A = total amount in the account at the end of t years
r represents the interest rate.
n represents the periodic interval at which it was compounded.
P represents the principal or initial amount deposited
From the information given,
P = $150
r = 4% = 4/100 = 0.04
n = 1 because it was compounded once in a year.
t = 20 years
Therefore,
A = 150(1 + 0.04/1)^1 × 20
A = 150(1.04)^20
A = $329
The interest is
329 - 150 = $179
The additional interest that the compound interest account earn than the simple interest account after 20 years is
179 - 120 = $59
