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George wants to invest $3,250. American Bank offers a simple interest rate of 4%, while Liberty Savings offers an interest rate of 3.75% compounded annually. How much more in interest will George earn after 8 years if he invests with Liberty Savings rather than American Bank? $4,363.03

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s1709395

Answer:

$4,363.03

i hope i actually get this right because im doing a test right now in math class

Using the interest formulas, it is found that George will earn $158 more in interest if he invests with Liberty Savings rather than American Bank.

Simple Interest:

[tex]E = Pit[/tex]

In which:

  • P is the principal, which is the amount invested.
  • i is the interest rate, as a decimal.
  • t is the time, in years.

For American Bank, we have that [tex]P = 3250, r = 0.04, t = 8[/tex], hence:

[tex]E = Pit = 3250(0.04)(8) = 1040[/tex]

Compound interest:

[tex]E = P[(1 + r)^t - 1][/tex]

For Liberty Savings, we have that [tex]r = 0.0375[/tex], hence:

[tex]E = P[(1 + r)^t - 1] = 3250[(1.04)^8 - 1] = 1198[/tex]

1198 - 1040 = 158.

He will earn $158 more in interest if he invests with Liberty Savings rather than American Bank.

For more on interest formulas, you can check https://brainly.com/question/25781328

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