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 investing option is best for her. (1 point)
A. Aria should invest with 6% compound interest because it will result in $86.76 more in interest earnings.
B. Aria should invest with 6.5% simple interest because it will result in $26.69 more in interest earnings.
C. Aria should invest with 6.5% simple interest because it will result in $187.26 more in interest earings.
D. Aria should invest with 6% compound interest because it will result in $73.81 more in interest earnings.
To calculate the interest earnings for each option, we can use the formula:
Simple Interest = Principal * Rate * Time
Compound Interest = Principal * (1 + Rate/100)^Time - Principal
For the 6.5% simple interest option, the interest earned would be:
Simple Interest = 6700 * 6.5/100 * 3 = $1309.50
For the 6% compound interest option, the interest earned would be:
Compound Interest = 6700 * (1 + 6/100)^3 - 6700 = $1222.74
The difference between the two interest earning types is:
$1309.50 - $1222.74 = $86.76
Therefore, the correct answer is option A: Aria should invest with 6% compound interest because it will result in $86.76 more in interest earnings.