Question

Monica deposits $400 into a savings account that pays a simple interest rate of 4.4%. Paul deposits $500 into a savings account that pays a simple interest rate of 3.7%. Monica says that she will earn more interest in 1 year because her interest rate is higher. Is she correct?

(A) Yes, Monica is correct.
(B) No, Monica is incorrect. Paul will earn more interest in 1 year.
(C) It is not possible to determine who will earn more interest in 1 year without knowing the exact interest rates that their banks offer.
(D) None of the above.

Answer 1

Paul will earn more interest in 1 year.

Step-by-step explanation:

To determine who will earn more interest in 1 year, we need to calculate the amount of interest earned by each person. Monica deposited $400 into an account with a simple interest rate of 4.4%. The interest earned can be calculated using the formula:

Interest = Principal × Rate × Time

Monica's interest = $400 × 0.044 × 1 = $17.60

Paul deposited $500 into an account with a simple interest rate of 3.7%. The interest earned can be calculated using the same formula:

Paul's interest = $500 × 0.037 × 1 = $18.50

Therefore, Paul will earn more interest in 1 year. The correct answer is (B) No, Monica is incorrect. Paul will earn more interest in 1 year.