Question

Benjamin deposits $3,000 into each of two savings

accounts. The first savings account pays 5% interest
compounded annually. The second savings account
pays 5% simple interest annually. If Benjamin makes
no other deposits or withdrawals, what will be the
difference between the interest earned by the two
savings accounts after 4 years?

Answer 1

So I have never stepped foot into this. But I have experience from this. So for the first one we can use the compound intrest formula - A = P(1+r/n)^nt so if we do that we get.

A = 3000(1+0.05/1)^1*4

So then we get A is equal to 3646.52

The next one we need to calculate

A = P (1 + rt)

So now we do A = 3000(1+0.05*1)

A = 3000*1.05 = 3150. We add them together and we get 6796.52.

So we subtract 6000 from that. He earned

796.52 dollars