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4 September, 10:05

I want to deposit money 1200 dollars in a bank. Bank offers me with a simple account with a yearly interest rate of. 12. Bank b offers me a compound quarterly account with a yearly interest rate of. 8. Which bank will offer me the most money after 3 years.

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  1. 4 September, 10:36
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    Answer: The simple interest will offer more money.

    Step-by-step explanation:

    Considering the simple interest offer, we would apply the formula for determining simple interest is expressed as

    I = PRT/100

    Where

    I represents interest paid on the amount deposited.

    P represents the principal or amount deposited

    R represents interest rate

    T represents the duration in years.

    From the information given,

    P = $1200

    R = 0.12 = 0.12 * 100 = 12%

    T = 3 years

    I = (1200 * 12 * 3) / 100 = $432

    Total balance after 3 years is

    1200 + 432 = $1632

    Considering the compound interest offer, we would apply the formula for determining compound interest which is expressed as

    A = P (1+r/n) ^nt

    Where

    A = total amount in the account at the end of t years

    r represents the interest rate.

    n represents the periodic interval at which it was compounded.

    P represents the principal or initial amount deposited

    From the information given,

    P = 1200

    r = 0.08

    n = because it was compounded 4 times in a year.

    t = 3 years

    Therefore,

    A = 1200 (1 + 0.08/4) ^4 * 3

    A = 1200 (1 + 0.02) ^12

    A = 1200 (1.02) ^12

    A = $1522
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