Question

Julia and Rodney decided to invest 15% of their salaries.The table shows their principal balance,interest rate,and type of interest.Based on the table,what is the sum of the interest they earned after 3 years?

*Imagine the table like this*
They both have $4500 as their principal balance.One of them has their interest type as compounded annually and the other is simple interest.The interest rate for both is 6%.

A- $1669.57
B- $4050
C- $1620
D- $4368.94

Answer 1

On the account with interest compounded annually, the account balance will be
P*(1 +r)^t
4500*1.06³ = 5358.57
so the interest earned will be
5358.57 -4500 = 859.57

On the account with simple interest, the interest earned will be
I = Prt
I = 4500*.06*3
I = 810.00

The total interest earned on the two accounts will be
$859.57 +810.00 = $1669.57 . . . . . . . . selection A