Jeremy opened two saving accounts at the beginning of 2010, each with an initial deposit of $4,000. Account A earned simple interest, and account B earned interest that was compounded annually. By the end of 2012, which account earned more interest, and how much more interest did it earn?
A. Account A; $12.03
B. Account A; $47.25
C. Account B; $12.03
D. Account B; $47.25
Simple Interest: 4000 x 3.15% x 2 = 252
Compound Interest: 4000(1+3.15%)2(Squared 2) - 4000 = 255.969
255.969-252= 3.969
So my problem here is that I don't know what I did wrong and what I'm suppose to do to fix this and get the right answer because my teacher said that the right answer is C but I don't know why and I never got a chance to ask her.
3 answers
Where did you get 3.15%?
By the end of 2012, that's 3 years, not 2.
A: 4000*.0315*3 = 378.00
B: 4000(1.0315^3-1) = 390.03
Looks like C to me.
A: 4000*.0315*3 = 378.00
B: 4000(1.0315^3-1) = 390.03
Looks like C to me.
If 3000 in an account interest 4% for 20 years
1 answer