Jessica deposits $50,000 into an account that pays 3% interest per year, compounded annually. Tom deposits $50,000 into an

Question

Jessica deposits $50,000 into an account that pays 3% interest per year, compounded annually.
Tom deposits $50,000 into an account that also pays 3% per year. But it is simple interest.
Find the interest Jessica and Tom 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 Jessica earns
(Interest compounded annually)
$0
$0
$0
Interest Tom earns
(Simple interest)
$0
$0
Who earns more interest?
O Jessica earns more.
O Tom earns more.
O They earn the same amount.
O Jessica earns more.
O Tom earns more.
O They earn the same amount.
O Jessica earns more.
O Tom earns more.
O They earn the same amount.

Kunduz · Accepted Answer

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