Livvi invests $19,430 in a savings account at her local bank which pays 1.8% simple annual interest. She also deposits $16,470 in an online savings account which pays 2.7% simple annual interest. After six years, which account will yield more interest, and approximately how much more interest will it yield?
Answer
A
The online account will give $2,668 more interest.
B
The online account will give $570 more interest.
C
The local account will give $2,960 more interest.
D
The local account will give $2,390 more interest.
Explanation
Use simple interest, I = P × r × t. The local account earns $19,430 × 0.018 × 6 = $2,098.44, while the online account earns $16,470 × 0.027 × 6 = $2,668.14. The online account earns $2,668.14 − $2,098.44 = $569.70 more, or about $570, so the correct choice is “The online account will give $570 more interest.”
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