First City Bank Pays 6 Percent Simple Interest On Savings

Question

First City Bank Pays 6 Percent Simple Interest On Its Savings Accou First City Bank pays 6 percent simple interest on its savings account balances, whereas Second City Bank pays 6 percent interest compounded annually. If you made a $60,000 deposit in each bank, how much more money would you earn from your Second City Bank account at the end of 10 years? (Do not round intermediate calculations and round your final answer to 2 decimal places. e.g., 32.16) Difference in accounts ____$?

Dr. Jack HW Helper · Accepted Answer

The comparison between simple interest and compound interest over a period of 10 years highlights the significant difference in accumulated savings. With simple interest, interest is calculated solely on the original principal, leading to linear growth. Conversely, compound interest calculates interest on both the principal and accumulated interest, resulting in exponential growth over time. Calculating the amount earned via simple interest: Simple interest earned at 6% on $60,000 over 10 years: I = P × r × t = $60,000 × 0.06 × 10 = $36,000 Total in First City Bank after 10 years: Amount = Principal + Interest = $60,000 + $36,000 = $96,000 For Second City Bank, interest compounded annually at 6%, the future value (FV) is calculated as: FV = P × (1 + r)^t = $60,000 × (1 + 0.06)^10 FV = $60,000 × (1.06)^10 ≈ $60,000 × 1.790847 = $107,450.82 The difference in earnings: $107,450.82 - $96,000 = $11,450.82 Rounded to two decimal places, the additional earnings from the compound interest account are $11,450.82. Remaining Questions and Computations Given the extensive number of questions, a similar comprehensive approach applies to each, involving the application of formulas for future value, present value, interest rate calculations, and time periods. For instance, future value calculations use: FV = PV × (1 + r)^t Present value calculations involve: PV = FV / (1 + r)^t Interest rate solving involves: r = (FV / PV)^(1/t) - 1 And solving for time (t): t = log(FV / PV) / log(1 + r) Specific calculations for each question depend on the provided data, but all follow these fundamental principles, applying the relevant formula accordingly, without rounding intermediate steps, and rounding final answers to two decimal places. Additional Analysis and Financial Concepts Further, questions involving investment growth, discounting future liabilities, and rate of return analyses demonstrate the application of financial mathematics to real-world scenarios such as college savings, real

First City Bank Pays 6 Percent Simple Interest On Savings

First City Bank Pays 6 Percent Simple Interest On Its Savings Accou

Paper For Above instruction

Remaining Questions and Computations

Additional Analysis and Financial Concepts

Conclusion

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