Question

HELP Whatisthedifferencebetweenthe4.1%simpleinterestpaidon$2,750for4yearsandthe3.8% interest compounded annually on the same amount over the same period of time? Show your work.

Answer 1

Answer: Simple interest amount larger by $9.00

Explanation:

Simple interest of 4.1% on $2,750 for 4 years:

Formula for simple interest is:

= Amount * (1 + rate * no. of periods)

= 2,750 * ( 1 + 4.1% * 4)

= 2,750 * 1.164

= $3,201

Compound interest of 3.8% on $2,750 for 4 years:

= Amount * (1 + rate) ^ no. of periods

= 2,750 * ( 1 + 3.8%)⁴

= $‭3,192

Difference:

= 3,201 - 3,192

= $9.00