Question

Rohan has $100 that he wants to save in a bank.bank one offers two types of saving account. 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 33% simple interest rate and other has a 4% compound interest rate.

Which account should Rohan choose in order to earn the most interest?
A Bank A simple interest account
B Bank a compound interest rate
C Bank b simple interest account
D Bank B compound interest account

Answer 1

[AI-generated answer — Bot GPT 3.5]

To determine which account will earn Rohan the most interest, we can calculate the interest earned for each account over a given period of time.

For Bank A's simple interest account:
Interest = Principal * Rate * Time
Interest = $100 * 5% * 1 year
Interest = $100 * 0.05
Interest = $5

For Bank A's compound interest account:
Interest = Principal * (1 + Rate)^Time - Principal
Interest = $100 * (1 + 0.048)^1 - $100
Interest = $100 * 1.048 - $100
Interest = $104.8 - $100
Interest = $4.8

For Bank B's simple interest account:
Interest = Principal * Rate * Time
Interest = $100 * 33% * 1 year
Interest = $100 * 0.33
Interest = $33

For Bank B's compound interest account:
Interest = Principal * (1 + Rate)^Time - Principal
Interest = $100 * (1 + 0.04)^1 - $100
Interest = $100 * 1.04 - $100
Interest = $104 - $100
Interest = $4

Therefore, Rohan should choose Bank B's simple interest account in order to earn the most interest, which is $33.