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Account A pays 4.04% simple interest
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19 Dec 2021, 12:16
19 Dec 2021, 12:16
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Question Stats:
69% (02:30) correct
30% (02:29) wrong based on 56 sessions
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Account A pays 4.04% simple interest and Account B pays x% interest compounded semiannually. The interest earned from a principal of $10000 from both accounts at the end of the first year is equal.
I solve it as follows :
since 10K in both is P I cancel It.
I am left with
\((4.04/100)=(x/4)^2\)
X=40%
May someone clarifies what is the mistake in my solution ?
Quantity A |
Quantity B |
x |
3.8 |
I solve it as follows :
since 10K in both is P I cancel It.
I am left with
\((4.04/100)=(x/4)^2\)
X=40%
May someone clarifies what is the mistake in my solution ?
Re: Account A pays 4.04% simple interest
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19 Dec 2021, 13:23
19 Dec 2021, 13:23
Don't approach it from the perspective of trying to solve the problem. Look at it from the perspective of if interest earned on the account w/ 3.8% interest will be greater than, less than, or equal to the interest earned in account A. So..
Account A: 10000*1.0404=10,404.
Total interest earned= 10404-10000=404
Account B (compounded semi annually): 3.8/2=1.9
10000*1.019=10190....10190*1.019=10383.61
Total interest earned=10383.61-10000-383.61
So, if the interest earned from both accounts were to be equal (must be equal to 404) the interest rate on account B must be greater than 3.8%. So answer A should be correct.
Account A: 10000*1.0404=10,404.
Total interest earned= 10404-10000=404
Account B (compounded semi annually): 3.8/2=1.9
10000*1.019=10190....10190*1.019=10383.61
Total interest earned=10383.61-10000-383.61
So, if the interest earned from both accounts were to be equal (must be equal to 404) the interest rate on account B must be greater than 3.8%. So answer A should be correct.
Re: Account A pays 4.04% simple interest
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20 Dec 2021, 02:37
20 Dec 2021, 02:37
zperk525 wrote:
Don't approach it from the perspective of trying to solve the problem. Look at it from the perspective of if interest earned on the account w/ 3.8% interest will be greater than, less than, or equal to the interest earned in account A. So..
Account A: 10000*1.0404=10,404.
Total interest earned= 10404-10000=404
Account B (compounded semi annually): 3.8/2=1.9
10000*1.019=10190....10190*1.019=10383.61
Total interest earned=10383.61-10000-383.61
So, if the interest earned from both accounts were to be equal (must be equal to 404) the interest rate on account B must be greater than 3.8%. So answer A should be correct.
Account A: 10000*1.0404=10,404.
Total interest earned= 10404-10000=404
Account B (compounded semi annually): 3.8/2=1.9
10000*1.019=10190....10190*1.019=10383.61
Total interest earned=10383.61-10000-383.61
So, if the interest earned from both accounts were to be equal (must be equal to 404) the interest rate on account B must be greater than 3.8%. So answer A should be correct.
Thank u, but I want to understand why my answer is wrong
