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Back to Simple and Compound Interest

Exercise 15

Avg difficulty 2.5

Bill invests $6,700 in a savings account that compounds interest monthly at 3.75% APR. Ted invests $6,500 in a savings account that compound interest annually at 3.8% APR.

  1. Find the effective rate for each account.

  2. Who will have the higher accumulated balance after 5 years?

Lee et al., Math in Society, §2.2 Simple and Compound Interest, Exercise 15

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Adapted from Math in Society © 2018–2024 Portland Community College Math Instructors. Licensed under CC BY-SA 4.0. Source: Math in Society. Imported at revision 68ee43c.