Question

Karl is comparing the interest rates for accounts at two different banks. He will deposit $600 into an account and will not make any additional deposits or withdrawals. Bank Q offers 1% interest compounded annually. Bank R offers 1.5% simple interest. Which statement about these accounts at the end of 2 years is true?

Answer 1

Answer:

Step-by-step explanation:

The formula for simple interest is i = prt, where p is the principal, r is the interest rate as a decimal fraction, and t is the elapsed time in years.

Case Q:  i = p(0.01)(2) = 0.02p

Case R:  i = p(0.015)(2) = 0.03p

In case R, the interest earned is 0.03p, which is 1.5 times the interest earned in case Q.