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First City Bank pays 6 percent simple interest on its savings account balances, whereas Second City...

First City Bank pays 6 percent simple interest on its savings account balances, whereas Second City Bank ... If you made an $8,100 deposit in each bank, how much more money would you earn from your Second City ...

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Answer #1

assuming second city bank pays 6% compound interest

and the period of deposit is for 10years

answer for the given question is

The simple interest per year is:

$8.100*0.06 = $486

So, after 10 years, you will have:

$486*10 = $4,860 in interest

The total balance will be $8,100 + $4,860 = $12,960

With compound interest, we use the future value formula:

FV = PV(1 + r)t

FV = $8,100(1 + 0.06)10

FV = $8,100(1.06)10 = $14,505.87

The difference is:

$14,505.87 - $12,960 = $1,545.87

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