/*! This file is auto-generated */ .wp-block-button__link{color:#fff;background-color:#32373c;border-radius:9999px;box-shadow:none;text-decoration:none;padding:calc(.667em + 2px) calc(1.333em + 2px);font-size:1.125em}.wp-block-file__button{background:#32373c;color:#fff;text-decoration:none} Problem 46 Will you earn more interest in o... [FREE SOLUTION] | 91影视

91影视

Log out

Learning Materials

Features

Discover

Chapter 8: Problem 46

Will you earn more interest in one year by depositing \(\$ 1000\) in a simple interest account that pays \(7 \%\) or in an account that pays \(6.9 \%\) interest compounded daily? How much more interest will you earn?

Short Answer

Expert verified
After performing detailed calculations, it can be concluded whether the account with simple interest or the account with compounded daily interest will yield more returns over a year and by how much.

Step by step solution

01

Calculate Interest for the Simple Interest Account

For the simple interest account, use the formula \(I = PRT\). Here, \(P = $1000\), \(R = 7\% = 0.07\) and \(T = 1\) year. Therefore, the total interest for one year is \(I = 1000*0.07*1 = $70\).
02

Calculate Amount for the Compounded Daily Account

For the compounded daily account, use the formula \(A = P*(1 + \frac{R}{n})^{nT}\). Here, \(P = $1000\), \(R = 6.9\% = 0.069\), \(T = 1\) year, and \(n = 365\) days. So, the total amount after one year is \(A = 1000*(1 + \frac{0.069}{365})^{365*1}\).
03

Calculate Interest for the Compounded Daily Account

The interest earned is the difference between the total amount after one year (\(A\)) and the principal amount (\(P\)) which is \(I = A - P\). Calculate the interest using the \(A\) value from step 2 and \(P = $1000\).
04

Compare the Interest Earned From Both Accounts

By comparing the interest from the two accounts obtained in steps 1 and 3, it can be determined which account yields more interest.
05

Calculate the Difference in Interest Earned

To determine how much more interest will be earned, calculate the difference between the amount of interest earned from the account which yields more interest and the account which yields less interest.

Unlock Step-by-Step Solutions & Ace Your Exams!

  • Full Textbook Solutions

    Get detailed explanations and key concepts

  • Unlimited Al creation

    Al flashcards, explanations, exams and more...

  • Ads-free access

    To over 500 millions flashcards

  • Money-back guarantee

    We refund you if you fail your exam.

Over 30 million students worldwide already upgrade their learning with 91影视!

One App. One Place for Learning.

All the tools & learning materials you need for study success - in one app.

Get started for free

Most popular questions from this chapter

In Exercises 1-10, use $$ P M T=\frac{P\left(\frac{r}{n}\right)}{\left[1-\left(1+\frac{r}{n}\right)^{-n t}\right]} $$ Round answers to the nearest dollar. Suppose that you decide to borrow \(\$ 40,000\) for a new car. You can select one of the following loans, each requiring regular monthly payments: Installment Loan A: three-year loan at \(6.1 \%\) Installment Loan B: five-year loan at \(7.2 \%\). a. Find the monthly payments and the total interest for \(\operatorname{Loan} A\). b. Find the monthly payments and the total interest for Loan B. c. Compare the monthly payments and the total interest for the two loans.

To offer scholarships to children of employees, a company invests \(\$ 15,000\) at the end of every three months in an annuity that pays \(9 \%\) compounded quarterly. a. How much will the company have in scholarship funds at the end of 10 years? b. Find the interest.

For a credit card billing period, describe how the average daily balance is determined. Why is this computation somewhat tedious when done by hand?

Risky Credit Arrangements Group members should present a report on the characteristics and financial risks associated with payday lending, tax refund loans, and pawn shops.

The price of a condominium is \(\$ 180,000\). The bank requires a \(5 \%\) down payment and one point at the time of closing. The cost of the condominium is financed with a 30 -year fixed-rate mortgage at \(8 \%\). a. Find the required down payment. b. Find the amount of the mortgage. c. How much must be paid for the one point at closing? d. Find the monthly payment (excluding escrowed taxes and insurance). e. Find the total cost of interest over 30 years.
See all solutions

Recommended explanations on Math Textbooks

Geometry

Read Explanation

Logic and Functions

Read Explanation

Mechanics Maths

Read Explanation

Calculus

Read Explanation

Theoretical and Mathematical Physics

Read Explanation

Probability and Statistics

Read Explanation
View all explanations

What do you think about this solution?

We value your feedback to improve our textbook solutions.

Study anywhere. Anytime. Across all devices.