stions and Problems
1. First City Bank pays 7.5 percent simple interest on its savings account balances, whereas
second Citi Banks pays 7.5 percent compounded annually. If you made a deposit of $ 8,600
in each bank, how much more money would you earn from your second City Bank account
at the end of eight years?
Answer (1)
Jawaban:Given:Deposit: $8,600Interest rate: 7.5% per yearTime: 8 years1. Simple Interest (First Bank)Formula: A = P(1 + r × t)A1 = 8,600 × (1 + 0.075 × 8)A1 = 8,600 × 1.6 = 13,760 USD2. Compound Interest (Second Bank)Formula: A = P(1 + r)^tA2 = 8,600 × (1 + 0.075)^8A2 ≈ 8,600 × 1.782 ≈ 15,325.20 USD3. Difference in earningsDifference = A2 - A1 ≈ 15,325.20 - 13,760 ≈ 1,565.20 USDAnswer:You would earn approximately 1,565.20 USD more from the Second Bank account with compound interest.
