Question

Kirs plans to use $15,000 to open a savings account with an annual interest rate of 5%. How much more interest will she earn over 8 years if she chooses a compound interest account, with interest compounded quarterly, instead of a simple interest account?



interest compounded quarterly: A = P (1 + r/4 )4t
simple interest: I = P • r • t

Answer 1

what have you done so far?

Answer 2

nothing

Answer 3

alright well you will have to help me get to the answer ;)
Where do you think we should start from

Answer 4

idek

Answer 5

alright well, it says that the person opens an account in simple interest, how much more interest will the person get if he opens a compounded interest account.

So i can say that first we have to calculate the simple interest, then we have to calculate the compound interest and finally find the difference between the two, to see how much more interest you get using compounded formula

Answer 6

eh such hard work

Answer 7

so simple interest formula is, I=p.r.t
I=15000 x 0.05 x 8
I= $6000

Answer 8

agreed ?

Answer 9

i guess

Answer 10

alright, now time to calculate the compound interest

Answer 11

okah