Question

Bob and Sarah invest $7000 eachfor 5 years.Bob invests his money at3.5%, simple interest andSarah invests her money at 3.5% interestcompounded annually.How much more interest will Sarah have earned thanBob at the end of the 5 years?A) $1225.80O $709080D) Sa8.80B) $1313.80

Answer 1

Bob investment

`\begin{gathered} I=(prt)/(100) \\ I=(7000*3.5*5)/(100) \\ I=(122500)/(100) \\ I=\text{ \$}1225 \end{gathered}`

Sarah's investment

`\begin{gathered} A=P(1+(r)/(n))^(nt) \\ A=7000(1+(0.035)/(1))^5 \\ A=7000*1.18768630565 \\ A=8313.80413953 \\ I=8313.80413953-7000 \\ I=\text{ \$}1313.80413953 \\ \end{gathered}`

Difference(sarah interest - Bob interest) = 1313.80413953 - 1225 = 88.8041395281 = $88.80

Therefore, Sarah have $88.80 interest more than Bob.