Question
If you deposit $5000 into an account for 4 years, How much MORE interest would you earn by compounding vs simple interest of 5.5%?
A. $100
B. $1100*
C. $1194
D. $94
A. $100
B. $1100*
C. $1194
D. $94
Answers
oobleck
You did not read the question carefully.
simple: 5000(1 + .055*4)
compound: 5000(1 + .055)^4
now subtract the simple amount from the compound amount.
simple: 5000(1 + .055*4)
compound: 5000(1 + .055)^4
now subtract the simple amount from the compound amount.