Two brothers, Steven and Walter, each inherit $43000. Steven invests his inheritance in a savings account with an annual return of 2.5%, while Walter invests his inheritance in a CD paying 5.2% annually. How much more money than Steven does Walter have after 1 year?

Respuesta :

Answer:

$1,161

Explanation:

Steven will earn $1,075 after 1 year (= $43,000 x 2.5% = $1,075), so he will have a total of $44,075.

Walter will earn $2,236 after 1 year (= $43,000 x 5.2% = $2,236), so he will have a total of $45,236.

Walter will have $1,161 more than Steve after one year (= $45,236 - $44,075 = $1,161)

The income is generally invested by people with a view to earn profits on those investments. Investments are nothing but putting or giving money for something which increases the principle amount over a period of time.

Here , two brothers Steven and Walter are investing the same amount of money in different ways with a view to earn benefits at a later date.

Given in the question:

Principle amount of each brother is $43,000

Interest rate of Steven is 2.5% per annum

Interest rate of Walter is 5.2% per annum

calculations

By looking at the interest rates we can say that higher the rate of interest the more profitable it is to invest.

We have to find out the total amount Steven and Walter will have after one year if they invest in the respective projects.

[tex]\begin{aligned}\rm Total\:amount &= Amount +[ Principle \times Rate \times Time]\\\\\rm Total\:amount &= \$43,000+[\$43,000 \times \dfrac{2.5 }{100} \times 1]\\\\\rm Total\:amount &=\$43,000+[\$43,000 \times .025 \times 1]\\\\\rm Total\:amount &= \$43,000+[\$1,075]\\\\\rm Total\:amount &= \$44,075 \end[/tex]

This the total amount of Steven after one year. We similarly calculated the amount of Walter and he managed to have an amount of $45,236 at the end of the year.

Further by deducting the amount of both the brothers at the end of the year, we get $44,075- $45236 = $1,161

Therefore Walter has $1,161 more than that of what his brother Steven has at the end of the year.

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