Answer:
- A: $250
- B: $600, earns more interest
Explanation:
The simple interest formula is ...
I = Prt . . . . . r is the interest rate, t is the number of years
Solving for P, we have ...
P = I/(rt)
Account A
6 months is 1/2 year, so the principal is ...
P = $4.38/(0.035×1/2) = $250.2857...
Rounded to the nearest dollar, the principal invested is $250.
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Account B
Using the same approach, for 18 months, t = 18/12 = 3/2 = 1.5.
P = $20.70/(0.023×1.5) = $600
The principal in Account B is $600.
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First Month's Interest
Using the interest formula, the first month's interest in each account is ...
A: I = 250×0.035×1/12 = $0.73
B: I = 600×0.023×1/12 = $1.15
Account B earns more interest in the first month.