First City Bank pays 8 percent simple interest on its savings account balances,

Question

First City Bank pays 8 percent simple interest on its savings account balances, whereas Second City Bank pays 8 percent interest compounded annually.

If you made a $65,000 deposit in each bank, how much more money would you earn from your Second City Bank account at the end of 8 years? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

Difference in accounts ______

At 6.90 percent interest, how long does it take to double your money? (Round your answer to 2 decimal places. (e.g., 32.16))

Length of time _____  years

At 6.90 percent interest, how long does it take to quadruple it? (Round your answer to 2 decimal places. (e.g., 32.16))

Length of time _______ years

First City Bank pays 8 percent simple interest on its savings account balances, whereas Second City Bank pays 8 percent interest compounded annually.

Explanation / Answer

Difference in accounts

=65000x1.08^8-[65000+(65000x8/100x8)]= $120310.4637-106600= $13710.46

At 6.90 percent interest, how long does it take to double your money?

2= 1.069^n

n= Log2/log1.069= 10.39 years

At 6.90 percent interest, how long does it take to quadruple it?

4= 1.069^n

n= Log4/log1.069= 20.78 years

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