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How much more interest is earned on an investment of $12,585 at 3.5% interest over 5 years if the interest is compounded annually rather than earning simple interest? a. They are the same. b. $159.65 c. $2,362.03 d. $12,744.65

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Answer:

The answer is c because your total account is $12,585 * 1.035^5=14947. Subtracting the original amount, you get 2362.03 total interest.

Hope the explanation is right.

abidemiokin

$159.65 is earned if compounded annually rather than simple interest.

The simple interest is calculated using the formula:

  • I = PRT
  • I = 12,585 * 0.035* 5
  • I = $2,202.375

For the compound interest

A = P(1+r)^n

A = 12585(1+0.035)^5

A = 12585*1.18768

A =14,946.95

Compound interest = 14,946.95 -12585

Compound interest  = $2,361.9528

Taking the difference in the interest = 2,361.9528 - 2,202.375

  • Difference = $159.65

$159.65 is earned if compounded annually rather than simple interest.

Hence the $159.65 is earned if compounded annually rather than simple interest.

Learn more on compound interest here: https://brainly.com/question/24924853

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