Question
First City Bank pays 5 percent simple interest on its savings account balances, whereas Second City Bank pays 5 percent interest
compounded annually. If you made a deposit of
Bank account at the end of 12 years?
Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g.,
Difference
compounded annually. If you made a deposit of
Bank account at the end of 12 years?
Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g.,
Difference
Ask by Henry Mathis. in the United States
Jan 26,2025
Upstudy AI Solution
Tutor-Verified Answer
Answer
After 12 years, you would earn $2,252.35 more from the Second City Bank account compared to the First City Bank account.
Solution
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Mind Expander
To calculate how much more money you would earn from Second City Bank, we first determine the total amount for both banks after 12 years.
For First City Bank (simple interest):
Total Amount = Principal + (Principal × Rate × Time)
Total Amount =
Total Amount = Principal + (Principal × Rate × Time)
Total Amount =
For Second City Bank (compound interest):
Total Amount = Principal × (1 + Rate) ^ Time
Total Amount =
Calculating
Total Amount =
Total Amount = Principal × (1 + Rate) ^ Time
Total Amount =
Calculating
Total Amount =
Now, we find the difference:
Difference =
Difference =
Therefore, the amount you would earn more from Second City Bank after 12 years is approximately
