Question

First City Bank pays 9 percent simple interest on its savings account balances, whereas Second City Bank pays 9 percent interest compounded annually. If you made a deposit of $7,500 in each bank, how much more money would you earn from your Second City Bank account at the end of eight years?

Answer 1

Amount which is earned from bank B will be $7444.21

Step-by-step explanation:

We have given principal amount P = $7500

Rate of interest r = 9 %

We have to find the interest after 8 years

Total amount after 8 year is given by

`A=P(1+(r)/(100))^n=7500* (1+(9)/(100))^8=7500* 1.99256=$14944.21`

So the amount which he earn more = $14944.21 - $7500 = $7444.21