You invested $1,650 in an account that pays 5 percent simple interest. How much more could you have earned over a 20-year period if the interest had compounded annually?
A)$849.22
B)$930.11
C)$982.19
D)$1,021.15
E)$1,077.94

Question

Quizplus · Accepted Answer

Simple interest = $1,650 + ($1,650 F1F1F1S1F1F1F10 .05 F1F1F1S1F1F1F10 20) = $3,300Annual compounding = $1,650 F1F1F1S1F1F1F10 (1.05)²⁰ = $4,377.94Difference = $4,377.94 - $3,300 = $1,077.94

You Invested $1,650 in an Account That Pays 5 Percent