contestada

.
Ben deposits $1,750 into each of two savings accounts.

Account I earns 2.75% annual simple interest
Account II earns 2.75% interest compounded annually
Ben does not make any additional deposits or withdrawals. Which amount is closest to the difference between the interest Ben will earn in Account I and the interest Ben will earn in Account II at the end of 2 years?

Respuesta :

The difference between the interest Ben will earn in Account I and the interest Ben will earn in Account II at the end of 2 years is $1.32.

What is the differnce in the interest?

Simple interest is when only the amount deposited increases in value.

Simple interest = deposit x interest rate x time

1750 x 0.0275 x 2 = $96.25

Interest earned with compounding = future value - amount deposited.

The formula for calculating future value:

FV = P (1 + r) nm

  • FV = Future value
  • P = Present value
  • R = interest rate
  • N = number of years

1750 x (1/0275)^2 = $1847.57

$1847.57 - $1750 = $97.57

Difference in interest; $97.57 - $96.25 = $1.32

To learn more about future value, please check: https://brainly.com/question/18760477

Otras preguntas