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 $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% 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 6.5% 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 $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% 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 6.5% 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 earnings for each option.

For simple interest at 6.5%, the formula to calculate the interest earnings is:

Interest = Principal x Rate x Time

Interest = $6,700 x 0.065 x 3
Interest = $1,091.50

For compound interest at 6%, the formula to calculate the interest earnings is:

Interest = Principal x (1 + Rate)^Time - Principal

Interest = $6,700 x (1 + 0.06)^3 - $6,700
Interest = $6,700 x (1.06)^3 - $6,700
Interest = $6,700 x 1.191016 - $6,700
Interest = $7,985.11 - $6,700
Interest = $1,285.11

The difference between the two interest earning types is:

$1,285.11 - $1,091.50 = $193.61

Therefore, Aria should invest with 6% compound interest because it will result in $193.61 more in interest earnings. However, none of the provided answer choices reflect this calculation.