c. determine how much more money is made in a compound interest account than a simple interest account for…

c. determine how much more money is made in a compound interest account than a simple interest account for each given principal, rate, and time.\n\n1. you wish to invest $1250. how much more money is made from $1250 invested in a 3.25% annual compound interest account over 5 years, compared to investing the money in a simple interest account?

c. determine how much more money is made in a compound interest account than a simple interest account for each given principal, rate, and time.\n\n1. you wish to invest $1250. how much more money is made from $1250 invested in a 3.25% annual compound interest account over 5 years, compared to investing the money in a simple interest account?

Answer

Explanation:

Step1: Identify given values

$P = $1250$, $r = 3.25% = 0.0325$, $t = 5$ years.

Step2: Calculate simple interest

$I_s = P \times r \times t = 1250 \times 0.0325 \times 5$

Step3: Evaluate simple interest amount

$I_s = $203.125$

Step4: Calculate compound interest amount

$A_c = P(1 + r)^t = 1250(1 + 0.0325)^5$

Step5: Evaluate compound interest total

$A_c \approx 1250(1.17341) \approx $1466.76$

Step6: Calculate compound interest earned

$I_c = A_c - P = 1466.76 - 1250 = $216.76$

Step7: Calculate the difference

$Difference = I_c - I_s = 216.76 - 203.13$

Answer:

$13.63 more is made in the compound interest account.