Questions: Two brothers, Mark and Walter, each inherit 18000. Mark invests his inheritance in a savings account with an annual return of 2.7%, while Walter invests his inheritance in a CD paying 5% annually. How much more money than Mark does Walter have after 1 year?

Solution Steps

Mark invests his inheritance of \$18,000 in a savings account with an annual return of \(2.7\%\). To find the total amount Mark has after 1 year, we use the formula for simple interest:

\[ \text{Total}_{\text{Mark}} = \text{Principal} \times (1 + \text{Rate}) \]

Substituting the given values:

\[ \text{Total}_{\text{Mark}} = 18000 \times (1 + 0.027) = 18000 \times 1.027 = 18486.00 \]

Walter invests his inheritance of \$18,000 in a CD paying \(5\%\) annually. To find the total amount Walter has after 1 year, we use the same formula:

\[ \text{Total}_{\text{Walter}} = \text{Principal} \times (1 + \text{Rate}) \]

Substituting the given values:

\[ \text{Total}_{\text{Walter}} = 18000 \times (1 + 0.05) = 18000 \times 1.05 = 18900.00 \]

To find how much more money Walter has than Mark after 1 year, we subtract Mark's total from Walter's total:

\[ \text{Difference} = \text{Total}_{\text{Walter}} - \text{Total}_{\text{Mark}} \]

Substituting the calculated totals:

\[ \text{Difference} = 18900.00 - 18486.00 = 414.00 \]

Final Answer