Answer :
Answer:
Step-by-step explanation:
Considering the compound interest investment, we would apply the formula for determining compound interest which is expressed as
A = P(1 + r/n)^nt
Where
A = total amount in the account at the end of t years
r represents the interest rate.
n represents the periodic interval at which it was compounded.
P represents the principal or initial amount deposited
From the information given,
P = $8500
r = 4.5% = 4.5/100 = 0.045
n = 1 because it was compounded once in a year.
t = 3 years
Therefore,
A = 8500(1 + 0.045/1)^1 × 3
A = 8500(1.045)^3
A = $9700
Considering the simple interest investment, we would apply the formula for determining simple interest which is expressed as
I = PRT/100
Where
I represents interest paid on the investment.
P represents the principal or amount invested
R represents interest rate
T represents the duration of the investment in years.
From the information given,
P = 8500
R = 4.5
T = 3 years
I = (8500 × 4.5 × 3)/100 = $1147.5
Total balance after 2 years is
1147.5 + 8500 = $9648
The compound interest will earn more. The amount by which it will be greater is
9700 - 9648 = $52
Answer:
Step-by-step explanation:
Principal, P = $ 8500
Time, T = 3 years
Rate of interest, R = 4.5 % per annum
the formula for the simple interest is given by
[tex]S.I. = \frac{P \times R \times T }{100}[/tex]
where, P is the principal, R is the rate of interest and T is the time taken
[tex]S.I. = \frac{8500 \times 4.5 \times 3 }{100}[/tex]
S.i. = $ 1147.5
The formula for the amount of compound interest is
[tex]A=P\left ( 1+\frac{R}{100} \right )^{T}[/tex]
[tex]A=8500\left ( 1+\frac{4.5}{100} \right )^{3}[/tex]
A = $ 9700
So, the compound interest is
C.I. = A - P = 9700 - 8500
C.I. = $ 1200
So, the compound interest is more than the simple interest.