Question

Chad and Ben open savings accounts at the same time. Chad invests $6,500 at 4.54% simple interest, and Ben invests $7,100 at 4.74% simple interest. After eight years, how much more interest has Ben earned than Chad?

a) $331.52
b) $420.67
c) $631.52
d) $719.59

Answer 1

Calculating simple interest for Chad and Ben over eight years and determining the difference reveals that Ben has earned $324.48 more than Chad, making option a) $331.52 the closest answer.

Step-by-step explanation:

The question asks us to calculate how much more interest Ben has earned than Chad after eight years, with both investing at different simple interest rates. First, we find the total simple interest for each person using the formula I = PRT, where I is the interest, P is the principal amount, R is the rate of interest per year, and T is time in years.

For Chad: I = 6500 × 0.0454 × 8, and for Ben: I = 7100 × 0.0474 × 8. After calculating these amounts, we subtract Chad's interest from Ben's interest to find out how much more interest Ben has earned.

Chad's interest: I = 6500 × 0.0454 × 8 = $2363.60

Ben's interest: I = 7100 × 0.0474 × 8 = $2688.08

Now, to find the difference: 2688.08 - 2363.60 = $324.48. The answer closest to this calculated difference is option a) $331.52.