Ben invested $7,500 twenty years ago with an insurance company that has paid him 6 percent simple interest on his funds.Charles invested $7,500 twenty years ago in a fund that has paid him 6 percent interest, compounded annually.How much more interest has Charles earned than Ben over the past 20 years?

Question

Quizplus · Accepted Answer

Ben earned simple interest: $7,500 * 0.06 * 20 = $9,000. Charles earned compound interest: $7,500 * (1 + 0.06)^20 - $7,500 = $16,553.52. The difference is $16,553.52 - $9,000 = $7,553.52.

Ben Invested $7,500 Twenty Years Ago with an Insurance Company