If you place $2,000.00 in a saving account with an interest rate of 4.5% month versus an account with a rate of 3.75% month, how much more interest could you earn in that month using the first account?
To calculate the difference in interest earned between the two saving accounts, we first need to find the interest earned by each account in one month.
For the first account with an interest rate of 4.5%, the interest earned can be calculated using the formula:
Interest = Principal * Rate
In this case, the principal is $2,000.00 and the rate is 4.5%. Converting the rate to a decimal gives us 0.045.
So, for the first account, the interest earned in one month would be:
Interest = $2,000.00 * 0.045 = $90.00
Now, let's calculate the interest earned for the second account with an interest rate of 3.75%. Using the same formula:
Interest = Principal * Rate
The principal is still $2,000.00 and the rate is 3.75%. Converting the rate to a decimal gives us 0.0375.
So, for the second account, the interest earned in one month would be:
Interest = $2,000.00 * 0.0375 = $75.00
To find the difference in interest earned, simply subtract the interest earned in the second account from the interest earned in the first account:
Difference = Interest (First Account) - Interest (Second Account)
Difference = $90.00 - $75.00
Difference = $15.00
Therefore, by using the first account with an interest rate of 4.5% per month, you could earn $15.00 more interest in one month compared to the second account with an interest rate of 3.75% per month.