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)
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.
Aria should invest with 6.5% simple interest because it will result in $26.69 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 $73.81 more in interest earnings.
To solve this problem, we can use the formula for simple interest:
Simple Interest = Principal x Rate x Time
In this case, the principal is $6,700, the rate is 6.5%, and the time is 3 years.
Simple Interest = 6,700 x 0.065 x 3
Simple Interest = $1,302.75
To calculate compound interest, we can use the formula:
Compound Interest = Principal x (1 + Rate)^Time - Principal
In this case, the principal is $6,700, the rate is 6%, and the time is 3 years.
Compound Interest = 6,700 x (1 + 0.06)^3 - 6,700
Compound Interest = $1,216.94
The difference between the two interest earning types is:
1,302.75 - 1,216.94 = $85.81
Therefore, the correct answer is: Aria should invest with 6.5% simple interest because it will result in $85.81 more in interest earnings.
i don't think that's one of the options
Apologies for the mistake. You're right, none of the provided options match the correct answer.
Let's calculate the actual difference between the two interest earning types to find the correct answer.
Using the simple interest formula:
Interest (simple) = Principal x Rate x Time
Interest (simple) = 6,700 x 0.065 x 3
Interest (simple) = $1,302.75
Using the compound interest formula:
Interest (compound) = Principal x (1 + Rate)^Time - Principal
Interest (compound) = 6,700 x (1 + 0.06)^3 - 6,700
Interest (compound) = $1,216.94
The difference between the two interest earning types is:
1,302.75 - 1,216.94 = $85.81
Therefore, the correct answer is: Aria should invest with 6.5% simple interest because it will result in $85.81 more in interest earnings.