Question

First City Bank pays 3.2 percent simple interest on its savings account balances, whereas Second City...

First City Bank pays 3.2 percent simple interest on its savings account balances, whereas Second City Bank pays 6.2 percent interest compounded annually.

If you made a $567 deposit in each bank, how much more would the Second City Bank account be worth than the First City Bank account at the end of 9 years? (round 6 decimal places)

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Answer #1

Ans $ 244.028700

FV = Future Value
PV = Present Value
r = rate of interest
n= no of period
FIRST BANK
INTEREST INCOME PRINCIPAL * RATE * TIME
567 * 3.2% * 9
163.296000
SECOND BANK FV = PV (1 + r )n
FV = 567*(1+6.2%)^9
FV = 974.3246936
INTEREST EARNED = FV - PV
974.3246936 - 567
407.324694
Second City Bank account be worth than the First City Bank account 407.324694 - 163.296000
244.028694
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