Question

Suppose Aaron earned $15.75 in interest for Account A and $28.00 in interest for Account B after 21 months. If the simple interest rate is 3.0% for Account A and 4.0% for Account B, which account has the greater principal? Explain.

a) Account A has the greater principal.
b) Account B has the greater principal.
c) Both accounts have the same principal.
d) Not enough information to determine.

Answer 1

To determine which account has the greater principal, we can use the formula for simple interest. Calculating the values, we find that Account A has the greater principal.

Step-by-step explanation:

To determine which account has the greater principal, we can use the formula for simple interest: I = P imes R imes T, where I is the interest, P is the principal, R is the interest rate, and T is the time in years.

For Account A, we have $15.75 = P_A imes 0.03 imes 1.75. Solving for P_A, we get P_A = $15.75 / (0.03 imes 1.75).

For Account B, we have $28 = P_B imes 0.04 imes 1.75. Solving for P_B, we get P_B = $28 / (0.04 imes 1.75).

Calculating the values, we find that P_A is greater than P_B. Therefore, Account A has the greater principal.