Nicole deposits $90,000 into an account that pays 2% interest per year, compounded annually.
Chris deposits $90,000 into an account that also pays 2% per year. But it is simple interest.
Find the interest Nicole and Chris 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
Interest Nicole earns
(Interest compounded annually)
Interest Chris earns
(Simple interest)
Who earns more interest?
First
SD
Nicole earns more.
Chris earns more.
They earn the same amount.
Second
Nicole earns more.
Chris earns more.
They earn the same amount.
Third
Nicole earns more.
Chris earns more.
They earn the same amount.
x
?