Tim wants to invest some money that his grandmother gave him. He has
The simple interest account has an interest rate of
. With this interest rate, what is the total amount in the bank after 5 years?
Add the interest he earns to his initial principal to find the total amount he would have after 5 years.
The compound interest account is also for 5 years (compounded yearly), but it has an interest rate of
. Find the total amount that he would have in this account.
Which account is a better investment?
Which account has more money after 5 years?