You can invest in an account that pays simple interest or an account that pays compound...

Question

Question

Answer 1

Answer #1

Amount after 9 years in compound interest account = Amount(1+Interest)^n

=3,100(1.05)^9 = $4,809.12

Interest in 10th year on simple interest account = 3,100*5% = $155

in Compound interest = 4809.12*5% = $240.456

Excess interest = $85.456

Answer 2

Similar Homework Help Questions

You can invest in an account that pays simple interest or an account that pays compound...

You can invest in an account that pays simple interest or an account that pays compound interest. In either case, you plan to invest $3,800 today and both accounts have an annual interest rate of 6 percent. How much more interest will you receive in the 10th year in the account that pays compound interest?
MC algo 4-3 Simple Vs. Compound Interest You can invest in an account that pays simple...

MC algo 4-3 Simple Vs. Compound Interest You can invest in an account that pays simple interest or an account that pays compound interest. In either case, you plan to invest $2,900 today and both accounts have an annual interest rate of 8 percent. How much more interest will you receive in the 11th year in the account that pays compound interest? Multiple Choice $268.87 $286,03 $281.72 $232.00 O$28254
You can invest in an account that pays simple interest or an account that pays compound...

You can invest in an account that pays simple interest or an account that pays compound interest. In either case, you plan to invest $1,500 today and both accounts have an annual interest rate of 8 percent. How much more interest will you receive in the 8th year in the account that pays compound interest?

You deposit $1,000 today into an account that pays 3 percent annual compound interest. How much...

You deposit $1,000 today into an account that pays 3 percent annual compound interest. How much money will you have in your account in 5 years? None of these are correct. $1,338 0 $1,159 O $1,276 $1,217
Problem 5-1 Simple Interest versus Compound Interest [LO1] First City Bank pays 8 percent simple interest...

Problem 5-1 Simple Interest versus Compound Interest [LO1] First City Bank pays 8 percent simple interest on its savings account balances, whereas Second City Bank pays 8 percent interest compounded annually. If you made a $68,000 deposit in each bank, how much more money would you earn from your Second City Bank account at the end of 8 years? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Difference in accounts
Answer in Excel If I deposit $8,000 in a bank account that pays interest of 1.5%,...

Answer in Excel If I deposit $8,000 in a bank account that pays interest of 1.5%, compounded annually, how much will I have in the account after 10 years? If I deposit $8,000 in a bank account that pays simple interest of 1.5%, how much will I have in the account after 10 years? How would you explain the difference in the answers to the foregoing two problems, given that both banks pay interest at the same rate? Be specific....

Future Value 13. You invest $10,000 today in a retirement account that pays 6 percent interest...

Future Value 13. You invest $10,000 today in a retirement account that pays 6 percent interest compounded annually. What is the total balance in the account 10 years from today? a. $17,908 14. You invest $10,000 today in a retirement account that pays 6 percent interest compounded annually. What is the total balance in the account 20 years from today? a. $32,071
(Related to Checkpoint 5.2) (Future value) (Simple and compound interest) If you deposit $15,000 today into...

(Related to Checkpoint 5.2) (Future value) (Simple and compound interest) If you deposit $15,000 today into an account earning an annual rate of return of 12 percent, in the third year how much interest would be earned? How much of the total is simple interest and how much results from compounding of interest?
If you invest $7,000 into a savings account that yields quarterly compound interest with an annual...

If you invest $7,000 into a savings account that yields quarterly compound interest with an annual interest rate of 7%, how much will you have in the savings account after 19 years?

Problem 5-1 Simple Interest versus Compound Interest (LO1)

Problem 5-1 Simple Interest versus Compound Interest (LO1) First City Bank pays 7 percent simple interest on its savings account balances, whereas Second City Bank pays 7 percent interest compounded annually. If you made a $56,000 deposit in each bank, how much more money would you earn from your Second City Bank account at the end of 9 years? (Do not round Intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Difference in accounts = $ _______