John and Susan just opened savings accounts at two different banks. Each deposited $1,000. Johns bank pays

Question:

John and Susan just opened savings accounts at two different banks. Each deposited $1,000. John’s bank pays simple interest at an annual rate of 10%, whereas Susan’s bank pays compound interest at an annual rate of 9.5%. No principal or interest will be taken out of the accounts for a period of five years. At the end of five years, whose balance will be higher and by how much (to the nearest dollar)?

Compound Interest
Compound interest (or compounding interest) is interest calculated on the initial principal, which also includes all of the accumulated interest from previous periods on a deposit or loan. Thought to have originated in 17th century Italy, compound...
Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question
Question Posted: