Monica deposits ​$200 into her account and pay a simple rate of 3.3​%. Paul deposits ​$300 into a savings and pays a simple rate of 3.1​%.

Question

Monica deposits ​$200 into a savings account that pays a simple interest rate of 3.3​%. Paul deposits ​$300 into a savings account that pays a simple interest rate of 3.1​%. Monica says she will get more interest in 1 year because her rate is higher. Is she​ correct?

Answer 1

Hello Georgette,

The formula for simple interest is I = Prt. P is the principal (amount invested or deposited), r is the interest rate; t is the duration of investment or deposit.

To answer your question, let's find and compare Paul and Monica's interest after 1 year:

Interest for Monica = 200*0.033*1 = $6.60

Interest for Paul = 300*0.031*1 = $9.30

Paul will get more interest after 1 year, so Monica was not correct.

Cheers.