comparing interest rates\none year ago, lindsey deposited $250 into a savings account. her balance is now…

comparing interest rates\none year ago, lindsey deposited $250 into a savings account. her balance is now $253. two years ago, jenn deposited $250 into a savings account. her balance is now $257.50. which account has the greater simple interest rate? explain.

comparing interest rates\none year ago, lindsey deposited $250 into a savings account. her balance is now $253. two years ago, jenn deposited $250 into a savings account. her balance is now $257.50. which account has the greater simple interest rate? explain.

Answer

Explanation:

Step1: Calculate Lindsey's simple - interest rate

The simple - interest formula is $I = Prt$, where $I$ is the interest, $P$ is the principal amount, $r$ is the interest rate, and $t$ is the time in years. For Lindsey, $P=$250$, $t = 1$ year, and $I=253 - 250=$3$. Rearranging the formula for $r$, we get $r=\frac{I}{Pt}$. Substituting the values, $r_{Lindsey}=\frac{3}{250\times1}=0.012 = 1.2%$.

Step2: Calculate Jenn's simple - interest rate

For Jenn, $P = $250$, $t = 2$ years, and $I=257.50 - 250=$7.50$. Using the formula $r=\frac{I}{Pt}$, we substitute the values: $r_{Jenn}=\frac{7.50}{250\times2}=\frac{7.50}{500}=0.015 = 1.5%$.

Step3: Compare the interest rates

Since $1.5%>1.2%$, Jenn's account has a greater simple - interest rate.

Answer:

Jenn's account has the greater simple interest rate.