Serenity wants to invest $25,000 of her savings for her retirement fund. Determine the difference in interest earnings between a 10% simple interest rate and a 7% compound interest rate with interest being compounded annually if Serenity invests her money for 25 years. Round the answer to two decimal places as needed.(1 point)
For a simple interest rate of 10%, the interest earnings can be calculated using the formula: Interest = Principal x Rate x Time = $25,000 x 0.10 x 25 = $62,500.
For a compound interest rate of 7% compounded annually, the interest earnings can be calculated using the formula: Amount = Principal x (1 + Rate)^Time = $25,000 x (1 + 0.07)^25 = $109,427.91.
The difference in interest earnings between the two rates is: $109,427.91 - $62,500 = $46,927.91.
Round the answer to two decimal places: $46,927.91 ≈ $46,927.90.
The difference in interest earnings is $46,927.90.