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First City Bank pays 7 percent simple interest on its savings account balances, whereas Second City Bank pays 7 percent interest compounded annually. If you made a $73,000 deposit in each bank, how much more money would you earn from your Second City Bank account at the end of 9 years

Respuesta :

Answer:

$ 15,217.52  

Explanation:

The future amount in the account nine years' time is computed using the future value  formula below:

FV=PV*(1+r)^n

PV is the amount of deposit of $73,000

r is the rate compound rate of interest of 7%

n is the length of time of deposit which is 9 years

FV=$73,000*(1+7%)^9=$ 134,207.52  

Amount earned=interest=FV-PV=$ 134,207.52-$73,000.00=$ 61,207.52  

The first bank interest is computed thus:

I=PRT

P is $73,000

R is the rate of 7%

T is 9 years

I=$73,000*7%*9=$45,990

The difference between the two interest amounts=$ 61,207.52-$ 45,990.00 =$ 15,217.52  

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