SOLUTION: A savings account in the Emigrant Savings Bank in New York now earns 2.25% simple interest a year. Bank One pays 6% interest compounded semiannually on a certificate of deposit. Ro

Algebra ->  Numeric Fractions Calculators, Lesson and Practice -> SOLUTION: A savings account in the Emigrant Savings Bank in New York now earns 2.25% simple interest a year. Bank One pays 6% interest compounded semiannually on a certificate of deposit. Ro      Log On


   

Question 961376: A savings account in the Emigrant Savings Bank in New York now earns 2.25% simple interest a year. Bank One pays 6% interest compounded semiannually on a certificate of deposit. Robert Wier wants to deposit $1,500 in his savings account, how much additional interest will he earn by placing the money in a certificate of deposit?
Answer by josmiceli(19441) About Me  (Show Source):
You can put this solution on YOUR website!
With simple interest, he will have
+1500%2A%28+1+%2B+.0225+%29+
+1500%2A1.0225+=+1533.75+
after 1 year
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With the CD, after 1 year, he has:
+A+=+1500%2A%28+1+%2B+.06%2F2+%29%5E%28+2%2A1+%29+
+A+=+1500%2A1.03%5E2+
+A+=+1500%2A1.0609+
+A+=+1591.35+
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+1591.35+-+1533.75+=+57.6+
The CD earns $57.60 more interest than
with simple interest account