Final answer:
Marco should choose Bank of Trust to get the most interest over the three-year period. Bank of Peace offers a 2.5% compound interest rate while Bank of Trust offers a higher interest rate with an extra percentage each year.
Step-by-step explanation:
To determine which bank will provide the most interest over the three-year period, we need to calculate the total amount of interest earned from each bank. Bank of Peace offers a 2.5% compound interest rate per year, while Bank of Trust offers a 3.8% interest rate for the first year and an extra 1% for each additional year.
For Bank of Peace, we can use the formula for compound interest: A = P(1 + r/n)^(nt), where A is the final amount, P is the principal amount, r is the annual interest rate, n is the number of times interest is compounded per year, and t is the number of years. Plugging in the values, we get A = 15000(1 + 0.025/1)^(1 × 3) = $16440.94.
For Bank of Trust, we need to calculate the interest for each year separately. In the first year, the interest earned is 15000 × 0.038 = $570. In the second year, the interest earned is 15000 × 0.038 × 1.01 = $577.14. In the third year, the interest earned is 15000 × 0.038 × 1.01 × 1.01 = $584.34. Adding up the total interest earned over three years, we get $1731.48.
Comparing the two banks, Bank of Trust offers a higher interest amount of $1731.48 compared to Bank of Peace's $16440.94.
Therefore, Marco should choose Bank of Trust to get the most interest over the three-year period.