Aria is investing $6,700 of her savings from her summer job for her college fund. She is planning to invest the amount for 3 years and can choose between simple interest at 6.5% and compound interest at 6%. Find the difference between the two interest earning types to help Aria decide which investment option is best for her.(1 point) Responses Aria should invest with 6% compound interest because it will result in $86.76 more in interest earnings. Aria should invest with 6% compound interest because it will result in $86.76 more in interest earnings. Aria should invest with 6% compound interest because it will result in $73.81 more in interest earnings. Aria should invest with 6% compound interest because it will result in $73.81 more in interest earnings. Aria should invest with 6.5% simple interest because it will result in $187.26 more in interest earnings. Aria should invest with 6.5% simple interest because it will result in $187.26 more in interest earnings. Aria should invest with 6.5% simple interest because it will result in $26.69 more in interest earnings.

Question

Aria is investing $6,700 of her savings from her summer job for her college fund. She is planning to invest the amount for 3 years and can choose between simple interest at 6.5% and compound interest at 6%. Find the difference between the two interest earning types to help Aria decide which investment option is best for her.(1 point) Responses Aria should invest with 6% compound interest because it will result in $86.76 more in interest earnings. Aria should invest with 6% compound interest because it will result in $86.76 more in interest earnings. Aria should invest with 6% compound interest because it will result in $73.81 more in interest earnings. Aria should invest with 6% compound interest because it will result in $73.81 more in interest earnings. Aria should invest with 6.5% simple interest because it will result in $187.26 more in interest earnings. Aria should invest with 6.5% simple interest because it will result in $187.26 more in interest earnings. Aria should invest with 6.5% simple interest because it will result in $26.69 more in interest earnings.

Answer 1

To find the difference between the two interest earning types, we need to calculate the interest earned with each option and then subtract the lower interest from the higher interest.

With simple interest at 6.5%, the interest earned can be calculated using the formula: Interest = Principal * Rate * Time
where Principal is $6,700, Rate is 6.5%, and Time is 3 years.

Interest earned with simple interest = $6,700 * 0.065 * 3 = $1,304.50

With compound interest at 6%, the interest earned can be calculated using the formula: Amount = Principal * (1 + Rate/100)^Time
where Principal is $6,700, Rate is 6%, and Time is 3 years.

Amount with compound interest = $6,700 * (1 + 0.06)^3 = $7,620.09
Interest earned with compound interest = Amount - Principal = $7,620.09 - $6,700 = $920.09

Now, we can find the difference between the two interest earnings:
Difference = Interest earned with compound interest - Interest earned with simple interest
= $920.09 - $1,304.50 = -$384.41

Since the difference is negative (-$384.41), it means that the interest earned with simple interest is higher than with compound interest. Therefore, Aria should invest with 6.5% simple interest because it will result in $384.41 more in interest earnings.

So, the correct answer is: Aria should invest with 6.5% simple interest because it will result in $384.41 more in interest earnings.