Question

Mary and Lewis each open a savings account at the same time. Mary invests $3,700 in an account yielding 3.2% simple interest, and Lewis invests $3,000 in an account yielding 5.9% simple interest. After fifteen years, who has the greater total amount of money, and how much greater is it?
a.
Lewis has $879 more than Mary.
b.
Lewis has $179 more than Mary.
c.
Mary has $776 more than Lewis.
d.
Mary has $345 more than Lewis.

Answer 1

Compute totals using simple interest A = P(1 + rt).

Mary: A = 3700(1 + 0.032·15) = 3700(1 + 0.48) = 3700(1.48) = 5476.

Lewis: A = 3000(1 + 0.059·15) = 3000(1 + 0.885) = 3000(1.885) = 5655.

Difference: 5655 − 5476 = 179. So Lewis has $179 more than Mary. Answer: b.