Answer:
The Difference between Amount earned from Compound Interest and amount earned from Simple Interest is $7.2
Step-by-step explanation:
Given as :
The Principal deposited in an account = $ 1500
The annual rate of interest = 4%
The time period = 3 years
From compounded method
Amount = principal × [tex](1+\frac{Rate}{100})^{Time}[/tex]
Or, Amount = $1500 × [tex](1+\frac{4}{100})^{3}[/tex]
Or, Amount = $1500 × ( 1.04 )³
∴ Amount = $1500 × 1.1248
I.e Amount = $1687.2
From Simple Interest method
Simple interest = [tex]\frac{principal\times rate\times time}{100}[/tex]
Or, Simple interest = [tex]\frac{1500\times 4\times 3}{100}[/tex]
Or, Simple interest = [tex]\frac{18000}{100}[/tex]
∴ Simple interest = $180
So, Amount = Interest + Principal
Amount = $180 + $1500
I,e Amount = $1680
Difference between Amount earned from CI and amount earned from SI = $1687.2 - $1680 = $7.2
Hence The Difference between Amount earned from Compound Interest and amount earned from Simple Interest is $7.2 Answer
