Question

Jordan deposits $100 into a savings account that pays him with a compound interest rate of 3%. Justin deposits $100 into an accountthat pays him simple interest at the rate of 3%. Who will see a greater return if they withdraw all of their money after 3 years?

Answer 1

Jordan

Step-by-step explanation:

Given that :

JORDAN :

Principal (P) = $100

Compound interest rate (r) = 3%

AMOUNT AFTER 3 YEARS:

A = P(1 + r/n)^nt

n = number of times interest is applied per period

t = time ; A = final amount

A = 100(1 + 0.03)^3

A = 100(1.03)^3

A = 100(1.092727)

A = $109.2727

JUSTIN :

Principal = $100

SIMPLE INTEREST interest rate = 3%

A = P(1 + rt)

A = 100(1 +(0.03 * 3))

A = 100(1 + 0.09)

A = 100(1.09)

A = 1.09 * 100

A = final amount after 3 years = $109