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

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.

Use the passage to answer the question.
Which account should Rohan choose in order to earn the most interest?

a. Bank A simple interest account

b. Bank A compound interest account

c. Bank B simple interest account

d. Bank B compound interest account

Answer 1

To determine which account would earn Rohan the most interest, we need to compare the interest rates offered by each option.

For Bank A:
- Simple interest rate: 5%
- Compound interest rate: 4.8%

For Bank B:
- Simple interest rate: 3%
- Compound interest rate: 4%

Out of the four options, the Bank A simple interest account offers the highest interest rate at 5%. Therefore, Rohan should choose the Bank A simple interest account in order to earn the most interest on his money.

So, the correct answer is:
a. Bank A simple interest account