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15 August, 16:15

Elen deposited $2,500 into a savings account that earns 5% interest per year. Her friend's bank offerS a 6% annual interest rate. How much more money would Ellen's money have earned in one year if she had deposited her money at her friend's bank?

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  1. 15 August, 16:19
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    Ellen's money would have earned $25 more than her money at her account

    Step-by-step explanation:

    * Lets explain how to solve the problem

    - The simple Interest Equation (Principal + Interest) is:

    A = P (1 + rt), Where

    # A = Total amount (principal + interest)

    # P = Principal amount

    # r = Rate of Interest per year in decimal r = R/100

    # t = Time period involved in months or years

    * Lets solve the problem

    - Ellen deposited $2,500 into a savings account that earns 5% interest

    per year

    - Her friend's bank offers a 6% annual interest rate

    * Lets calculate her money after 1 year in each account

    # Her account

    ∵ P = $2500

    ∵ r = 5/100 = 0.05

    ∵ t = 1

    ∵ A = P (1 + rt)

    ∴ A = 2500 (1 + 0.05 * 1) = 2500 (1.05) = 2625

    * Her money would be $2625 in one year

    # Her friend's account

    ∵ P = $2500

    ∵ r = 6/100 = 0.06

    ∵ t = 1

    ∵ A = P (1 + rt)

    ∴ A = 2500 (1 + 0.06 * 1) = 2500 (1.06) = 2650

    * Her money would be $2650 in one year

    ∵ 2650 - 2625 = 25

    ∴ Ellen's money would have earned $25 more than her money at her

    account
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