Question

Two brothers, Steven and Kevin, each inherit $19,000. Steven invests his inheritance in a savings account with an annual return of 2.7%, while Kevin invests his inheritance in a CD paying 4.9% annually. How much more money than Steven does Kevin have after 1 year?

a) $492
b) $735
c) $609
d) $825

Answer 1

Kevin has $418 more money than Steven after 1 year.

Step-by-step explanation:

To calculate the difference in money Kevin has compared to Steven after 1 year, we need to calculate the interest earned by each brother. For Steven, he invested $19,000 in a savings account with an annual return of 2.7%. To calculate his interest, we multiply his initial investment by the interest rate: $19,000 * 0.027 = $513. For Kevin, he invested $19,000 in a CD paying 4.9% annually. Again, we calculate his interest by multiplying his initial investment by the interest rate: $19,000 * 0.049 = $931.

Now, we find the difference between the interest earned by Kevin and Steven: $931 - $513 = $418. Therefore, Kevin has $418 more money than Steven after 1 year.