Question

Kevin invested $8,000 for one year at a simple annual interest rate of 6 percent and invested $10,000 for one year at an annual interest rate of 8 percent compounded semiannually. What is the total amount of interest that Kevin earned on the two investments?A. $880

B. $1,088
C. $1,253
D. $1,280
E. $1,296

Answer 1

Total interest =$1296

Explanation:

Kevin invested $8,000 for one year at a simple annual interest rate of 6 percent

Simple interest =
`(Pnr)/(100)`

P=8000, n=1 year and r=6

interest =
`(8000(1)(6))/(100)`

Interest = 480 dollars

`compound \ interest =P(1+(r)/(n) )^(nt)-p`

P= 10000, t=1, r=8%=0.08, n=2 for semiannually

`compound \ interest =10000(1+(0.08)/(2) )^(2(1))-10000`

Interest = 10816- 10000=816

Total interest =
`480+816=1296`