To determine which account Rohan should choose in order to earn the most interest, let's calculate the interest earned from each account type after one year.
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Bank A Simple Interest Account (5%): \[ \text{Interest} = \text{Principal} \times \text{Rate} \times \text{Time} = 100 \times 0.05 \times 1 = 5.00 \]
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Bank A Compound Interest Account (4.8%): The formula for compound interest is: \[ A = P(1 + r/n)^{nt} \] For this case, since it's compounded annually (n=1): \[ A = 100(1 + 0.048)^{1} = 100 \times 1.048 = 104.80 \] So, the interest earned is: \[ 104.80 - 100 = 4.80 \]
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Bank B Simple Interest Account (3%): \[ \text{Interest} = 100 \times 0.03 \times 1 = 3.00 \]
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Bank B Compound Interest Account (4%): Again using the compound interest formula: \[ A = 100(1 + 0.04)^{1} = 100 \times 1.04 = 104.00 \] So, the interest earned is: \[ 104.00 - 100 = 4.00 \]
Now, summarizing the interest earned from each account:
- Bank A Simple Interest: $5.00
- Bank A Compound Interest: $4.80
- Bank B Simple Interest: $3.00
- Bank B Compound Interest: $4.00
The account that gives Rohan the most interest is the Bank A Simple Interest Account, which earns $5.00.
Answer: Bank A simple interest account