Question

I have a problem I cant explain a single question maybe if I send you a picture?

Answer 1

first we will solve for simple interest,

principal is P = 1000 $

interest rate R = 5.5 %

time T = 5 years.

so, mple interest in five years is,

`SI=\frac{\text{PRT}}{\text{1}00}`
`\begin{gathered} SI=(1000*5.5*5)/(100) \\ SI=275\text{ \$} \end{gathered}`

now for compound interest,

rate of interest is R = 5 %

the Amount after 5 years is

`A=P(1+(R)/(100))^T`
`\begin{gathered} A=1000*(1+(5)/(100))^5 \\ A=1000((105)/(100))^5 \\ A=1000*(1.05)^5 \end{gathered}`
`A=1276.28`

so, the compound interest is

CI = A - P

CI = 1276.28 - 1000

CI = 276.28

the difference between simple interest and compound interest is

CI - SI

= 276.28 - 275

= 1.28 $

thus, the answer is 1.28 $ that is option C