Answer:
Ellen's money would have earned $25 more than her money at her account
Explanation:
* Lets explain how to solve the problem
- The simple Interest Equation (Principal + Interest) is:
A = P(1 + rt) , Where
# A = Total amount (principal + interest)
# P = Principal amount
# r = Rate of Interest per year in decimal r = R/100
# t = Time period involved in months or years
* Lets solve the problem
- Ellen deposited $2,500 into a savings account that earns 5% interest
per year
- Her friend's bank offers a 6% annual interest rate
* Lets calculate her money after 1 year in each account
# Her account
∵ P = $2500
∵ r = 5/100 = 0.05
∵ t = 1
∵ A = P(1 + rt)
∴ A = 2500(1 + 0.05 × 1) = 2500 (1.05) = 2625
* Her money would be $2625 in one year
# Her friend's account
∵ P = $2500
∵ r = 6/100 = 0.06
∵ t = 1
∵ A = P(1 + rt)
∴ A = 2500(1 + 0.06 × 1) = 2500 (1.06) = 2650
* Her money would be $2650 in one year
∵ 2650 - 2625 = 25
∴ Ellen's money would have earned $25 more than her money at her
account