Question

Ann deposited money into two new accounts, A and B. Account A earns 5 percent simple annual interest and account B earns 8 percent simple annual interest. If there were no other transactions in the two accounts, then the amount of interest that account B earned in the first year was how many dollars greater than the amount of interest that account A earned in the first year?

Answer 1

Account B will generate 1.6 times as much interest as Account A assuming initial investment values are equal

Step-by-step explanation:

Annual interest is determined by multiplying the principle amount by the interest rate. In this case, if amount X is deposited in account A and amount Y is deposited in account B, the interest generated in each account will be:

`Account A = X*5\% = 0.05X`

`Account B = Y*8\% = 0.08Y`

As absolute values of investment are not specified, exact difference in amount of interest cannot be determined. However, ratios can calculated.

`(Account B)/(Account A) = (0.08Y)/(0.05X)`

If it can be assumed that the investment in both accounts is equal (X = Y), the equation can be simplified as below:

`(Account B)/(Account A) = (0.08Y)/(0.05Y)`

`(Account B)/(Account A) = 1.6`

Thus, Account B will generate 1.6 times more interest than Account A