Both banks pay interest at same rate

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Reference no: EM132008231

1. If I deposit $8,000 in a bank account that pays interest of 2%, compounded annually, how much will I have in the account after 10 years?

2. If I deposit $8,000 in a bank account that pays simple interest of 2%, how much will I have in the account after 10 years?

3. How would you explain the difference in the answers to the foregoing two problems, given that both banks pay interest at the same rate? Be specific.

Reference no: EM132008231

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