Two brothers, tom and Walter , each inherit $29000. Times invests his inheritance in a savings account with an annual return of 2.1%, while Walter invests his inheritance in a CD paying 5.5%. How much more money than Tom does Walter have after 1 year?

1 Answer
A08
Mar 7, 2018

#$\ 986 #

Explanation:

Rate of interest is simple interest for Tom in a savings account. He can withdraw his money any time he wishes to.

Tom will receive after #1\ yr# an interest payment of
#=29000 xx 2.1/100 = $\ 609#

Walter invests his inheritance in a CD (Certificate of Deposit) account. He gave up access to his money for a specified period of time. Assuming that given rate of interest is annual.

Walter will receive after #1\ yr# an an interest payment of
#=29000 xx 5.5/100 = $\ 1595#

Therefore, Walter has more money than Tom

#=1595 - 609 = $\ 986 #

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