Question

What will be the simple interest earned when you invest $1,000 for 3 years at 10 percent and the compound interest earned when you invest the same sum for 2 years at 5 percent ?

The simple interest earned when you invest $1,000 for 3 years at 10 % is $______
. The interest compounded when you invest the same sum for 2 years at 5 % is $______
.

Answer 1

The simple interest earned when you invest $1,000 for 3 years at 10 % is $ 300 . The interest compounded when you invest the same sum for 2 years at 5 % is $ 331 .

Explanation:

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Answer 2

Investment amount = $1000

Calculate Simple Interest:
Interest for 1 year = 10% x 1000 = $100
Interest for 3 years = $100 x 3 = $300

Calculate compound Interest:
Interest = 1000(1 + 0.1)³ - 1000 = $331

Answer:
(a) The simple interest earned when you invest $1,000 for 3 years at 10 % is $300.
(b) The interest compounded when you invest the same sum for 2 years at 5 % is $331.