Simple Interest
The interest earned is calculated as follows:
I=P.r.t
Where:
I=Interest
P=initial principal balance
r=interest rate
t=time
Brother A invested his money of P=$47000 at a rate of r=2.3%. Converting to decimal r=2.3/100 = 0.023. We need to calculate the total money he has after t= 1 year. Applying the formula:
I1 = $47000 * 0.023 * 1
I1 = $1081
The total money in his account is
A1 = $47000 + $1081 = $48081
Brother B invested his money of P=$47000 in CD paying a rate of r=4.9%. The decimal equivalent of the rate is r=4.9/100 = 0.049. The investment lasts for t= 1 year, thus the interest is:
I2 = $47000 * 0.049 * 1
I2 = $2303
The total money is
A2 = $47000 + $2303 = $49303
The difference between their amounts of money is:
$49393 - $48081 = $1222
Thus, brother B has $1222 more then brother A after 1 year