Question

Lakelyn has $2,500.00 to invest in a savings account. Savings account 1 earns 4% simple interest and savings account 2 earns 4% interest compounded annually. If she plans to deposit the $2,500.00 and leave it in the account for 1 year, in which savings account would she earn more interest?

Answer 1

Let’s go back to the savings account example above. We started with $10,000 and ended up with a little more than $500 in interest after 10 years in an account with a 0.50% annual yield.

Explanation:

Let’s go back to the savings account example above. We started with $10,000 and ended up with a little more than $500 in interest after 10 years in an account with a 0.50% annual yield.