21. carlos wants to open a savings account with $200. bank a has a savings account that offers a 3% annual…
21. carlos wants to open a savings account with $200. bank a has a savings account that offers a 3% annual interest rate. bank b has a savings account that offers a 4% annual interest rate. assuming that carlos does not make any additional deposits or withdrawals, what would be the balance in each account by the end of the year? how much more money would carlos have if he chose bank b? (lesson 5)
Answer
Explanation:
Step1: Calculate balance for Bank A
The formula for simple - interest balance is (A = P(1 + rt)), where (P=$200), (r = 0.03) (3% as a decimal), and (t = 1) year. [A_{A}=200(1+0.03\times1)=200\times1.03=$206]
Step2: Calculate balance for Bank B
Using the same formula, with (r = 0.04) (4% as a decimal) [A_{B}=200(1 + 0.04\times1)=200\times1.04=$208]
Step3: Calculate the difference
Subtract the balance of Bank A from Bank B: (A_{B}-A_{A}=208 - 206)
Answer:
The balance in Bank A is ($206), the balance in Bank B is ($208). Carlos would have ($2) more if he chose Bank B.