Question

Ben is choosing between two savings accounts. Both accounts pay 3% interest. Account X pays compound interest. Account Y pays simple interest. Ben should choose account X because

A) the interest would be tax-free.

B) it would pay interest on interest.

C) the interest rate would decrease over time.

D) the interest rate would increase over time.

Answer 1

the interest rate is 3%

Ben should choose account X because, since it uses compound interest, it would pay interest on interest. Simple interest only pays on the original balance.

so your answer will be B it would pay interest on interest