Answer:
Explanation:
IF Simple interest; Simple Interest formula would be
S.I = Principal *rate * time
Principal = 12,000
rate = 5.6% or 0.056 as a decimal
time = 5 years
therefore S.I = 12,000 * 0.056 * 5
S.I = 3,360
Therefore, based on simple interest, you will pay $3,360 in interest.
IF Compound interest, the formula would be;
Compound interest = [ Principal *(1+rate )^t ] - Principal
= [ 12,000*(1+0.056)^5 ] -12,000
= [12,000*1.313165883] - 12,000
=15,757.9906 -12,000
= 3,757.9906
Therefore, based on compounding, you will pay $3,757.9906 in interest.