Rohan has $100.00 that he wants to save in a bank. Bank A offers two types of savings accounts. One has a 5% simple interest rate, and the other has a 4.8% compound interest rate. Bank B also offers two types of savings accounts. One has a 3% simple interest rate, and the other has a 4% compound interest rate.
Question
Use the passage to answer the question.
Which account should Rohan choose in order to earn the most interest after leaving the account open for 5 years?
A. Bank A simple interest account
B. Bank A compound interest account
C. Bank B simple interest account
D. Bank B compound interest account
To determine which account will earn the most interest after 5 years, we need to calculate the total amount in each account using the given interest rates.
For Bank A, the simple interest account will accrue interest at a rate of 5%. After 5 years, the amount in the account will be 100 + (100 * 0.05 * 5) = $125.
For Bank A, the compound interest account will accrue interest at a rate of 4.8%. To calculate the compound interest, we can use the formula A = P(1 + r/n)^(nt), where A is the final amount, P is the principal (initial amount), r is the interest rate, n is the number of times interest is compounded per year, and t is the number of years.
In this case, the principal is $100, the interest rate is 4.8%, the number of times interest is compounded per year is 1, and the number of years is 5. Plugging these values into the formula, we get A = 100(1 + 0.048/1)^(1 * 5) = $123.69.
For Bank B, the simple interest account will accrue interest at a rate of 3%. After 5 years, the amount in the account will be 100 + (100 * 0.03 * 5) = $115.
For Bank B, the compound interest account will accrue interest at a rate of 4%. Using the same formula as before, with a principal of $100, an interest rate of 4%, a compounding frequency of 1, and a time period of 5 years, we get A = 100(1 + 0.04/1)^(1 * 5) = $121.66.
Comparing these values, we can see that the Bank A simple interest account earns the most interest after 5 years, with an ending balance of $125. Therefore, the correct answer is A. Bank A simple interest account.
What is the most likely effect on a person's income if he or she has little education and few skills?
A. The person's income will vary greatly.
B. The person will earn a high income.
C. The person's income will decline over time
D. The person will earn a low income.
D. The person will earn a low income.
Which of these is a non-monetary positive incentive for entrepreneurs?
A. the need to hire and train workers
B. the risks of starting a new enterprise
C. the satisfaction of creating new products
D. the responsibilities of running a business
C. the satisfaction of creating new products
Which of these people is an example of an entrepreneur?
A. Malia started selling jewelry she made in an online store.
B. Liam found a summer job walking dogs in his neighborhood.
C. Pavel worked hard to learn to speak a foreign language.
D. Ophelia took classes in painting and drawing at an art center.