4. Two savings accounts each start with a $200 principal and have an interest rate of 5%. One account earns simple interest and the other is compounded annually. Which account will earn more interest over 10 years? How much more?

The compounded annually account will earn more interest over 10 years

Step-by-step explanation:

The rule of the simple interest is I = Prt, where

The rule of the compounded interest is A = P, where

The interest I = A - P

∵ Each account start with $200

∴ P = 200

∵ They have an interest rate of 5%

∴ r = 5% = 5 ÷ 100 = 0.05

∵ One account earns simple interest and the other is compounded  

   annually

∴ n = 1 ⇒ compounded annually

∵ The time is 10 years

∴ t = 10

→ Substitute these values in the two rules above

∵ I = 200(0.05)(10)

∴ I = 100

∴ The simple interest = $100

∵ I = A - P

∵ A = 200

∴ A = 325.7789254

∵ I = 325.7789254 - 200

∴ I = 125.7789254

∴ The compounded interest = $125.7789254

∵ The simple interest is $100

∵ The compounded interest is $125.7789254

∵ $125.7789254 > $100

∴ The compounded annually account will earn more interest

   over 10 years

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step-by-step explanation: