Question

Suppose you have $300 to invest. One bank offers an annual

simple interest rate of 4.5% for a 3-year investment. Another
bank offers an annual simple interest rate of 6.8% for a 2-year
investment. Which account will earn you more money?

Answer 1

$40.50

Explanation:

The formula we'll use for this is the simple interest formula, or:

I= P × r × t

Where:

P is the principal amount, which is $300.00.

r equals the interest rate, which 4.5% per year, or as a decimal, 4.5/100=0.045.

t equals time involved, which is 3 years

To find the simple interest, we multiply 300 × 0.045 × 3 to get that the interest is: $40.50

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