Answer:
Option A: Interest rate of 8.25% simple for 2 years
If you deposit $2,500 in a savings account with an interest rate of 8.25% simple for 2 years, the interest earned can be calculated as follows:
Year 1:
Interest = Principal x Rate x Time
Interest = $2,500 x 8.25% x 1
Interest = $2,062.50
Year 2:
Interest = Principal x Rate x Time
Interest = $2,500 x 8.25% x 2
Interest = $4,125.00
Total Interest Earned:
Total Interest = $2,062.50 + $4,125.00
Total Interest = $6,187.50
Therefore, the amount of interest earned on a deposit of $2,500 with an interest rate of 8.25% simple for 2 years is $6,187.50.
Option B: Interest rate of 6.5% compounded annually for 2 years
If you deposit $2,500 in a savings account with an interest rate of 6.5% compounded annually for 2 years, the interest earned can be calculated as follows:
Year 1:
Interest = Principal x Rate x Time
Interest = $2,500 x 6.5% x 1
Interest = $1,625.00
Year 2:
Interest = Principal x Rate x Time
Interest = $2,500 x 6.5% x 2
Interest = $3,281.25
Total Interest Earned:
Total Interest = $1,625.00 + $3,281.25
Total Interest = $4,906.25
Therefore, the amount of interest earned on a deposit of $2,500 with an interest rate of 6.5% compounded annually for 2 years is $4,906.25.
Explanation: