Question

City Bank offers a 4.75% simple

interest rate, while First National
offers 3.9%. If Tom wants to set
up a new account with $500. how
much more money will he earn in
Interest at City Bank over First
National after 12 years?

Answer 1

He will earn $51 more

Explanation:

Let us compare the amounts he will earn in both banks

Mathematically, simple interest is;

I = PRT/100

Where P represents principal, R represents rate and T represents time

For Citibank, we have

I = (500 * 4.75 * 12)/100 = $285

For National bank

I = (500 * 3.9 * 12)/100 = 234

The difference between the amount of money earned in both banks will be;

285-234 = 51