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Monica deposits $300 into a savings account that pays a simple interest rate of 4.2% paul deposits $400 into a savings account that pays a simple interest rate of 3.8% monica says that she will earn more interest in 1 year because her interest rate is higher is she correct?

User Littles
by
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1 Answer

3 votes

Answer:

Paul earned $2.6 more interest than Monica.

Explanation:

Giving the following information:

Monica:

Initial investment= $300

Interest rate= 4.2%

Paul:

Initial investment= $400

Interest rate= 3.8%

To calculate the income earned, we need to use the following formula:

I= P*r*t

P= principal

r= interest rate

t= time

Monica:

I= 300*0.042*1= $12.6

Paul:

I= 400*0.038*1= $15.2

Paul earned $2.6 more interest than Monica.

User Raymi
by
8.5k points
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