Question

Monica deposits $200 into a savings account that pays a simple interest rate of 3.4%. Paul deposits $300 into a savings account that pays a simple interest rate of 2.6%. Monica says that she will earn more interest in 1 year because her interest rate is higher. Is she correct? Justify you response.

Answer 1

Explanation:

Yes, Monica is correct. When dealing with simple interest, the amount of interest earned is determined by the principal amount, the interest rate, and the time the money is invested. Since Monica and Paul both have different principal amounts and interest rates, the amount of interest each of them earns in one year will be different. Monica's account has a higher interest rate of 3.4%, so she will earn more interest in one year compared to Paul's account, which has a lower interest rate of 2.6%.