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One 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.

Verified Answer :

$257.50
because it have a higher amount

Answer:

Jenns account has the greater simple interest rate

Step-by-step explanation:

The formula for simple interest is:

\(A=P*(1+r*t)\)

Where A is the final amount after investment, P is the initial amount, r is the rate of interest and t is the time periods.

For Lindsey:

\(253=250*(1+r*1)\)

Solve for r

\(r=(253/250)-1=0.012\)

Lindsey simple interest was 1.2% annually

For Jenn:

\(257.50=250*(1+r*2)\)

\(r=((257.50/250)-1)/2=0.015\)

Jenn simple interest was 1.5% annually

Therefore Jenns account has the highest simple interest rate.

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