Question

Greg invests $2,680 in a CD paying 7.0% interest, and $3,060 in an online savings account paying 4.5% interest. How much more interest will the CD have earned than the savings account after 1 year? a. $25.90 b. $49.90 c. $380.00 d. $499.00

Answer 1

B.) is the correct answer I just took the test

Answer 2

Let us assume the interest to be a simple interest.

S.I =
`(p*r*t)/(100)`

Amount invested in CD = 2680

Interest rate = 7% or 0.07

Time = 1 year

So simple interest earned =
`2680*0.07*1=187.60`

Amount invested in online savings account = 3060

Rate of interest = 4.5% or 0.045

Interest earned =
`3060*0.045*1=137.70`

Hence, the difference between both the interests earned =

`187.60-137.70=49.90`

Hence, option B = $49.90 is the correct answer.

The CD has earned $49.90 more than online savings account.