Question

Monica deposits ​$200 into a savings account that pays a simple interest rate of 3.9​%. Paul deposits ​$300 into a savings account that pays a simple interest rate of 3.2​%. Monica says that she will earn more interest in 1 year because her interest rate is higher. Is she​ correct? Justify your response.

Answer 1

Answer: No, Monica is incorrect. Paul will get more interest in 1 year.

Explanation:

Formula: Simple interest :
`\frac{\text{principal x rate x time}}{100}`

Given: For Monica, Principal =$200, rate = 3.9%

Interest in 1 year =
`(200*3.9*1)/(100)=\$7.8`

For Paul, Principal =$300, rate = 3.2%

Interest in 1 year =
`(300*3.2*1)/(100)=\$9.6 > \$7.8`

Thus , Paul will get more interest in 1 year.

i.e. Monica is incorrect.