Question

Sue can either borrow 10,000 dollars for 5 years with a simple interest of 7% annually or an interest which compounds annually for 6%. How much more money, rounded to the nearest dollar, would she have to pay back for the more expensive interest

Answer 1

10000((1+.07*5)-(1+.06)^5) = 117.74

Answer 2

interest = 5 * 10,000 * .07 = 3500

interest = 10,000 * 1.06^5 - 10,000 = 3382.26

subtract