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Monica deposits $200 into a savings account that pays a simple interest rate of 4.4%. Paul deposits $300 into a savings account that pays a simple interest rate of 3.3%. Monica says that she will earn more interest in 1 year because her interest rate is higher. Is she correct? Justify your response.

Answer :

Formula of simple interest rate:

[tex]S\mathrm{}I=\frac{P\times R\times T}{100}[/tex]

Where,

[tex]\begin{gathered} P=\text{ Principal} \\ R=\text{ Rate} \\ T=\text{ Time} \end{gathered}[/tex]

For Monica interest rate is:

[tex]\begin{gathered} S\mathrm{}I\mathrm{}=\frac{200\times4.4\times1}{100} \\ =8.8 \end{gathered}[/tex]

For Paul interest rate is:

[tex]\begin{gathered} S\mathrm{}I\mathrm{}=\frac{300\times3.3\times1}{100} \\ =3\times3.3 \\ =9.9 \end{gathered}[/tex]

No, Paul interest rate higher then Monic.

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