Question

Dakota earned $18.00 in interest in Account A and $30.00 in interest in Account B after 18 months. If the simple interest rate is 4% for Account A and 5% for Account B, which account has the greater principal? Explain.

Answer 1

Dakota earned $18.00 in interest in Account A and $30.00 in interest in Account B after 18 months. If the simple interest rate is 4% for Account A and 5% for Account B, which account has the greater principal?

Remember that

The simple interest formula is equal to

$I=P\mleft(rt\mright)$

where

I is the Final interest Value

P is the Principal amount of money to be invested

r is the rate of interest

t is Number of Time Periods

in this problem we have

Account A

I=$18

r=4%=0.04

t=18 months=18/12=1.5 years

substitute

18=P(0.04*1.5)

solve for P

P=$300

Account B

I=$30

r=4%=0.04

t=18 months=18/12=1.5 years

substitute

30=P(0.04*1.5)

solve for P

P=$500

therefore

the account B has the greater principal

option B is the answer