Question

Monica deposits $100 into a savings account that pays a simple interest rate of 3.4%. She also deposits $200 into a savings account that pays a simple interest rate of 2.2%. Monica claims she will earn more interest because her interest rate is higher. Do you agree?

a. Yes, Monica will earn more interest due to the higher interest rate.
b. No, Monica will earn more interest due to the larger principal amount.
c. It cannot be determined without knowing the time the money is deposited for.
d. Both options a and b could be correct depending on the time the money is deposited for.

Answer 1

The amount of simple interest Monica earns in each savings account depends on the principal, time, and the interest rate. Without knowing the time period of the deposits, we cannot conclusively say whether Monica will earn more interest due to the higher interest rate or the larger principal.

Step-by-step explanation:

The question at hand involves a scenario where a student named Monica deposits money into two different savings accounts with different simple interest rates and principal amounts, aiming to determine where she will earn more interest. Specifically, Monica deposits $100 in an account with a 3.4% interest rate, and $200 in another account with a 2.2% interest rate. Definitely, the interest earned will not only depend on the interest rate but also on the principal amount and the time period for which the money is deposited. The total simple interest earned in each account can be calculated using the formula: Simple Interest = Principal × Interest Rate × Time.

To evaluate Monica's claim that she will earn more interest from the higher interest rate account, we must compare the interest from both accounts. Without additional information on the duration of the deposits, it is not possible to accurately determine which account will earn more interest. Thus, the correct response would be (c) It cannot be determined without knowing the time the money is deposited for.