Question

PLEASE HELP ME ASAP

What's the difference in the total value of a $15,000 deposit between an account with an annual simple interest rate of 3.3% and an account with an annual compound interest rate of 3.3% after 50 years? Round all final answers to the nearest whole number.

Answer 1

Simple interest is only paid on the original amount
Interest each year = 15000 x 3.3% = 495
Balance after 50 years = 15000 + 50 x 495 = $39750

Increasing by 3.3% can be done by multiplying by 1.033 each year
Balance after 50 years = 15000 x 1.033^50 = $76052 (0 d.p.)

Difference in balances = 76052 - 39750 = $36302