Question

Question 10

Matt puts $125 into a savings account that earns 6% simple interest for 5 years. What difference would there be if the interest rate were compounded?
The simple interest rate would earn Matt about $5.00 more each year.
А
B
The compounded interest rate would earn Matt about $5.00 more each year.
С
The simple interest rate would earn Matt about $5.00 more after 5 years.
D
The compounded interest rate would eam Mat about $5.00 more after 5 years.

Answer 1

It would be the compounded unrest earns about 5 more. The simple interest rate formula is I=Prt and compound is A=P(1+r) t in squared form. So to get the 5 more you would divide by how many years and that made it about 5 more a year. Hope that makes sense! :)