Answer:
Community Bank is the better choice.
Step-by-step explanation:
-We calculate the interest earned on the principal over 4 years for the different banks:
#First Bank, i=0.01, P=$1,000
[tex]\#Calculate \ the \ effective \ interest \ rate.\\\\\\i_m=(1+i/m)^m-1=(1+0.01/1)^1-1=0.0100\\\\\therefore A=1000(1.01)^4=1040.60\\\\I=A-P=1040.60-1000=\$40.60[/tex]
Hence, the interest earned on the principal is $40.60
#Community Bank, i=0.02,P=$1,000, the interest earned, I, over 4 years is:
[tex]I=PRT\\\\=1000\times 0.02\times 4\\\\=80.00[/tex]
The simple interest earned is greater than the compound interest earned:
[tex]I_s>I_c\\\\\$80>\$40.60[/tex]
Hence, Community Bank is the better choice.
Answer:
Community Bank
Step-by-step explanation:
My teacher gave us the answer. :)
