Year First Second Third Interest Melissa earns (Interest compounded annually) $ $ $ Interest Greg earns (Simple interest)

College Algebra
1st Edition
ISBN:9781938168383
Author:Jay Abramson
Publisher:Jay Abramson
Chapter9: Sequences, Probability And Counting Theory
Section: Chapter Questions
Problem 15PT: Rachael deposits $3,600 into a retirement fund each year. The fund earns 7.5% annual interest,...
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Melissa deposits $70,000 into an account that pays 4% interest per year, compounded annually.
Greg deposits $70,000 into an account that also pays 4% per year. But it is simple interest.

Find the interest Melissa and Greg earn during each of the first three years.
Then decide who earns more interest for each year.
Assume there are no withdrawals and no additional deposits.

Year
First
Second
Third
Interest Melissa earns
(Interest compounded annually)
$
$
$
Interest Greg earns
(Simple interest)
$
$
$
Who earns more interest?
 
 
 Melissa earns more.
 
 Greg earns more.
 
 They earn the same amount.
 
 
 Melissa earns more.
 
 Greg earns more.
 
 They earn the same amount.
 
 
 Melissa earns more.
 
 Greg earns more.
 
 They earn the same amount.
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