Question

Larry and Peggy are making decisions on their bank accounts. Larry wants to put the original money in an account with a higher interest rate. Peggy wants to put more money in as a principle amount because the more you start with, the more interest you will gain. Explain which method will result in more money.

Answer 1

As no compounding methodology is given, we must assume it is the same for both. Thus, the higher rate will ALWAYS result in a greater accumulation.