Question

Principal = $450

rate = 5%
time = 4 years
simple interest =
compound interest =

Answer 1

Simple interest=90

Compound interest=96.98

Explanation:

Simple interest=p×r×t

Simple interest=450×0.05×4=90

Compound interest=future value-principal

Future value=principal (1+r)^t

Future value=450×(1+0.05)^(4)=546.98

Compound interest=546.98-450=96.98

Answer 2

Simple interest: $540

Compound interest: $546.98 (if compounded annually)

Explanation: