Question

Sunshine bank offers 6% simple interest on deposits. Tangerine bank offers 5% interest compound annually. State the difference in final balances if $2000 is deposited in each bank for 2 years.

A) $202.80

B) $35

C) $25

D) $5

Answer 1

2000+2(.06*2000)-2000(1.05^2)=$35.00

So the simple interest at 6% yields $35 more than the compound 5% interest.

Answer 2

B) $35 Hope it helps :)