document.write( "<A HREF=/cgi-bin/jump-to-question.mpl?question=1179256>Question 1179256</A>: <I><SPAN STYLE=\"word-break: break-all;\"> How much more interest is earned on a $100 Series EE Savings Bond than $50 deposited in a savings account at 2.5% interest compounded annually for 15 years.  [Assume the bond matures in 15 years.] </SPAN>\n" );
document.write( "</I><HR><TABLE width=100%><TR><TD><B><A HREF=http://www.algebra.com/>Algebra.Com's</A> Answer #850249 by </B><A HREF=/tutors/aboutme.mpl?userid=CPhill><B>CPhill(1959)</B></A><img src=\"/images/stars/stars-12.gif\" alt=\"\" >&nbsp;<A HREF=/tutors/aboutme.mpl?userid=CPhill><IMG SRC=http://www.algebra.com/images/aboutme-small.gif BORDER=0 alt=\"About Me\" VALIGN=MIDDLE></A>&nbsp;<IMG SRC=http://www.algebra.com/cgi-bin/show-face.mpl?user=CPhill><BR>You can <A HREF=\"/cgi-bin/embed-solution.mpl?show=1&solution=850249\">put this solution on YOUR website!</A><BR><SPAN STYLE=\"word-break: break-all;\"> To accurately determine the difference in interest earned, we need to consider how Series EE Savings Bonds accrue interest. They don't have a fixed annual rate like a traditional savings account. Instead, they earn a fixed rate for a certain period, and then the rate can change. However, for simplicity, we can use an average historical rate of return for the bond.\r<BR>\n" );
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document.write( "Here's a breakdown of the calculation:\r<BR>\n" );
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document.write( "1. Series EE Savings Bond:\r<BR>\n" );
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document.write( "Principal: $100<BR>\n" );
document.write( "Years: 15<BR>\n" );
document.write( "Average Annual Rate (Approximation): 4% (This is an approximation, actual rates vary)<BR>\n" );
document.write( "Using the compound interest formula:\r<BR>\n" );
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document.write( "Future Value = Principal * (1 + rate)^years<BR>\n" );
document.write( "Future Value = $100 * (1 + 0.04)^15<BR>\n" );
document.write( "Future Value ≈ $180.09<BR>\n" );
document.write( "Interest Earned = Future Value - Principal = $180.09 - $100 = $80.09<BR>\n" );
document.write( "2. Savings Account:\r<BR>\n" );
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document.write( "Principal: $50<BR>\n" );
document.write( "Years: 15<BR>\n" );
document.write( "Annual Interest Rate: 2.5%<BR>\n" );
document.write( "Using the compound interest formula:\r<BR>\n" );
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document.write( "Future Value = Principal * (1 + rate)^years<BR>\n" );
document.write( "Future Value = $50 * (1 + 0.025)^15<BR>\n" );
document.write( "Future Value ≈ $72.41<BR>\n" );
document.write( "Interest Earned = Future Value - Principal = $72.41 - $50 = $22.41<BR>\n" );
document.write( "3. Difference in Interest:\r<BR>\n" );
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document.write( "Difference = Interest Earned (Bond) - Interest Earned (Savings)<BR>\n" );
document.write( "Difference = $80.09 - $22.41 = $57.68<BR>\n" );
document.write( "Answer:\r<BR>\n" );
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document.write( "A $100 Series EE Savings Bond would earn approximately $57.68 more in interest than a $50 savings account deposit over 15 years, using an approximated 4% average annual rate of return for the bond. </SPAN>\n" );
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