Question

i will metal!!! 2.

(1 pt)
Ashley and Elise each deposited $1500 into separate accounts. Each account earned 4% interest over 8 years. At the end of 8 years, Elise had earned more than Ashley. Why?

A.
Elise earned compound interest, and Ashley earned simple interest.

B.
Elise earned simple interest, and Ashley earned compound interest.

C.
Elise had a different interest rate than Ashley.

D.
Elise invested for a different amount of time than Ashley.

Answer 1

Okay, to solve this problem we need to understand the difference between simple and compound interest. I'm assuming you know, so I'll just repeat. Simple interest is just what it sounds like; simple. As time goes on, it adds 4% each year (assuming it is annual) to the deposited amount. Compound interest is another story. Compound interest adds the 4% to the deposited amount... Plus the interest already added. So obviously, an account with compound interest would get more. I'll leave you with that, try to solve the question and I'll check your work.

Answer 2

B?

Answer 3

Close, but the answer would be A. Elsie is the one who earned more, so she would have an account with compound interest. Very common mistake.

Answer 4

I wish you good luck! And remember, if I helped you in any way, a fan and medal would be appreciated! :)