Question

Wendy and connor each deposit 8300 into accounts that earn 3.5 interest and connor's account earns annual compound interest who will earn more interest after 25 years and how much more interest will they earn

Answer 1

Connor earns more interest than Wendy.

Wendy earns an interest of 7262.50 while Connor earns an interest of 11312.90

Explanation:

The initial amount that Wendy and Connor deposited is 8300.

They both earn interests of 3.5%.

We will calculate the interest of each of them.

WENDY (Simple Interest)

Simple Interest is given as:

`I = (P*R*T)/(100)`

where P = principal = 8300

R = rate = 3.5%

T = number of years = 25 years

Therefore, her interest will be:

`I = (8300 * 3.5 * 25)/(100) = 7262.50`

CONNOR (Compound Interest)

Compound interest is given as:

`I = P(1 + R)^T -P`

Therefore, his interest will be:

`I = 8300(1 + (3.5)/(100))^(25) - 8300\\ \\I = 8300( 1 + 0.035)^(25) - 8300\\\\I = 8300(1.035)^(25) - 8300\\\\I = (8300*2.363) - 8300\\\\I = 19612.9 - 8300\\\\I = 11312.90`

Therefore, Connor earns more interest than Wendy. Wendy earns an interest of 7262.50 while Connor earns an interest of 11312.90.

Note: The amount in the question is unitless, that is why my answers are also unitless.