Question

Theodore earned ​$ in interest after 4 years on a principal of ​$440. His simple interest rate is​ 4.2%. Bella earned ​$216 in interest after 4 years on a principal of ​$1500 . Bella Her simple interest rate is​ 3.6%. Which bank would you rather​ use, Theodore's or​ Bella's? Explain your reasoning.

Answer 1

Theodore's

the interest rate in Theodore's bank is higher

Explanation:

A rational investor would want to invest in a bank that offers a higher interest rate because more money is usually preferred to less money.

If the same amount, 1500 was deposited in both banks,

interest in Theodore's bank after 4 years = 1500 x 0.042 x 4 = $252

$252 would be preferred to the $216 earned at Bella's bank