Rohan has $100.00 that he wants to save in a bank. Bank A offers two types of savings accounts. One has a 5% simple interest rate, and the other has a 4.8% compound interest rate. Bank B also offers two types of savings accounts. One has a 3% simple interest rate, and the other has a 4% compound interest rate.

Question

Use the passage to answer the question.

Which account should Rohan choose in order to earn the most interest after leaving the account open for 5 years?

A.
Bank A simple interest account

B.
Bank A compound interest account

C.
Bank B simple interest account

D.
Bank B compound interest account

Answer 1

After leaving the account open for 5 years, Rohan would earn the most interest by choosing Bank A's compound interest account with a 4.8% interest rate. Thus, the answer is B.