Question

On a certain day, Tim invested $1,000 at 10 percent annual interest, compounded annually, and Lana invested 2,000 at 5 percent annual interest, compounded annually.The total amount of interest earned by Tim’s investment in the first 2 years was how much greater than the total amount of interest earned by Lana’s investment in the first 2 years?

A. $5
B. $15
C. $50
D. $100
E. $105

Answer 1

A. $5

Explanation:

Tim: 1000 x (1 + 0.10)² = 1210

Interest: 1210 - 1000 = 210

Lana: 2000 x (1 + 0.05)² = 2205

interest': 2205 - 2000 = 205

difference: 210 - 205 = 5