First City Bank pays 7 percent simple interest on its savings account balances,

Question

First City Bank pays 7 percent simple interest on its savings account balances, whereas Second City Bank pays 7 percent interest compounded annually.

First City Bank pays 7 percent simple interest on its savings account balances, whereas Second City Bank pays 7 percent interest compounded annually.

First City Bank pays 7 percent simple interest on its savings account balances, whereas Second City Bank pays 7 percent interest compounded annually. Required: If you made a deposit of $10,000 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 answer to 2 decimal places (e.g., 32.16).) Difference

Explanation / Answer

First bank = 10000+(10000*0.07*8)=15600

Second bank=10000*1.07^8=17181.9

more = 17181.9-15600=1581.861

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