Question

Joan Barrett has $10,000 in a savings account which pays 6.5% annual interest. She is thinking about buying ten $1,000 bonds which pay 8% annual interest. How much

more annual interest will the bonds eam than the savings account?

Answer 1

Bonds will earn $150 more than the savings account

Explanation:

at 6.5% for $10,000 savings

The interest is 0.065* 10,000= $650 interest annually

For the bonds,

0.08 * 10,000 = $800

Bonds will earn $800 - $650 = $150 more than the savings account