Question

Anne deposited $500 in an account that earns 6% simple annual interest. Shelly deposited $500 in an account that earns 6% annual interest compounded annually. They leave the money in the account for 4 years. What is the difference between the two accounts?

Answer 1

$11.23

Explanation:

A) 500 + 4(.06*500)

`500+4\left(0.06\cdot \:500\right)=620`

B)
`500\cdot \:1.06^4=631.23848`