Question

First City Bank pays 7 percent simple interest on its savings account balances, whereas Second City Bank pays 7 percent interest compounded annually.If you made a $64,000 deposit in each bank, how much more money would you earn from your Second City Bank account at the end of 9 years? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

Answer 1

$13,341.39

Step-by-step explanation:

The computation is shown below:

For First city bank,

The Future value is

= $64,000 + $64,000 × 7%× 9

= $64,000 + $40,320

= $104,320

And for Second city bank,

Given that

NPER = 9,

RATE = 7%,

PV = $64,000

PMT = $0

The formula is shown below:

=-FV(RATE;NPER;PMT;PV;TYPE)

After applying the above formula, the future value is $117,661.39

Now finally

More money would be

= $117,661.39- $104,320

= $13,341.39