First City Bank pays 8 percent simple interest on its savings account balances, whereas Second City Bank pays 8 percent interest compounded annually. If you made a deposit of $14,500 in each bank, how much more money would you earn from your Second City Bank account at the end of 9 years? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Answer is complete but not entirely correct. Difference 2$ 0.00 X
First City Bank pays 8 percent simple interest on its savings account balances, whereas Second City Bank pays 8 percent interest compounded annually. If you made a deposit of $14,500 in each bank, how much more money would you earn from your Second City Bank account at the end of 9 years? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Answer is complete but not entirely correct. Difference 2$ 0.00 X
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:First City Bank pays 8 percent simple interest on its savings account balances, whereas
Second City Bank pays 8 percent interest compounded annually.
If you made a deposit of $14,500 in each bank, how much more money would you earn
from your Second City Bank account at the end of 9 years? (Do not round intermediate
calculations and round your answer to 2 decimal places, e.g., 32.16.)
X Answer is complete but not entirely correct.
Difference
$
0.00 X
Expert Solution
Step 1
Compound interest is the additional interest earned on the reinvested amount. It is interest on interest.
Amount = A*(1+r)n
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