Question

What total amount of money would you have if you invested $5,000 at 2% interest for 3 years and the interest was calculated using the simple interest method? Use the simple interest example above as a guide to calculate simple interest, please show your work.

Answer 1

Answer:7,445.50

Step-by-step explanation:

Answer 2

simple Interest: $5,300.00

Annually Compounded Interest: 5,306.04

Explanation: Compound Interest means that you earn "interest on your interest", while Simple Interest means that you don't - your interest payments stay constant, at a fixed percentage of the original principal.