Find the difference in financial gains when $3,200 is invested for 8 years with an interest rate of 4.5% for both simple interest and compound interest, and interest is compounded annually.
Answers:
A. $231.57
B. $47,810.80
C. $1,350.72
D. $198.72
Answers for this quick check are!..
1. 26,100
2. 586.14
3. 4,681.92
4. Simple interest at 3% offers more financial gains
5. 198.72
100% easy ehehe(♡꒳♡)
To calculate the difference in financial gains between simple and compound interest, we first need to find the amount earned through simple interest and compound interest separately.
For simple interest, the formula is:
Simple Interest = (Principal) x (Interest Rate) x (Time)
Simple Interest = $3,200 x 0.045 x 8
Simple Interest = $1,152
For compound interest, the formula is:
Compound Interest = (Principal) x (1 + Interest Rate)^Time - Principal
Compound Interest = $3,200 x (1 + 0.045)^8 - $3,200
Compound Interest = $3,200 x (1.045)^8 - $3,200
Compound Interest ≈ $4,434.31 - $3,200
Compound Interest ≈ $1,234.31
Now we can find the difference in financial gains by subtracting the simple interest from the compound interest:
Difference = Compound Interest - Simple Interest
Difference = $1,234.31 - $1,152
Difference ≈ $82.31
The calculated difference is approximately $82.31, so the closest option is:
D. $198.72