Question

over 2 years how much more will a savings account with a simple interest rate of 5.3% yield in earnings than a savings account with a simple interest rate of 2.4% if the original balance of both accounts is 7,200

Answer 1

0417.60

Explanation:

The straightforward way to work this problem is to compute the interest on both accounts and find the difference. I find it easier to consider the difference in rates and compute the interest difference that way.

The difference in interest rates is 5.3% -2.4% = 2.9%. Then the difference in interest will be found using the interest formula:

I = Prt . . . . P=principal, r=interest rate(difference), t=years

I = (7200)(0.029)(2) = 7200(0.058) = 417.60

The higher yield account will earn 417.60 more than the lower-yield account over 2 years.