For an investment of $100,000 at 9% interest for 8 years, find (a)the simple interest, and (b)the
Compound interest if interest is calculated once per year.
A)a. $72,000; b. $104,892.12
B)a. $99,256.26; b. $104,892.12
C)a. $72,000; b. $99,256.26
D)a. $99,256.26; b. $72,000

Question

Quizplus · Accepted Answer

(a) The simple interest can be found using the formula I = PRT, where P is the principal, R is the interest rate, and T is the time. Plugging in the values, we get I = 100,000 x 0.09 x 8 = $72,000.
(b) The compound interest can be found using the formula A = P(1 + r/n)^(nt), where A is the final amount, P is the principal, r is the interest rate, n is the number of times compounded per year, and t is the time. Since interest is calculated once per year, we can plug in n = 1. Plugging in the values, we get A = 100,000(1 + 0.09/1)^(1 x 8) = $193,256.26. Therefore, the compound interest is A - P = $193,256.26 - $100,000 = $93,256.26.

Option C is the correct choice because it has the correct values for both the simple and compound interest. (a) Simple interest = P * r * t = $100,000 * 0.09 * 8 = $72,000
(b) Compound interest = P * (1 + r/n)^(nt) - P = $100,000 * (1 + 0.09/1)^(1*8) - $100,000 = $99,256.26
Therefore, the correct choice is C.

For an Investment of $100,000 at 9% Interest for 8