Serenity wants to invest $25000 of her savings for her retirement fund. determine the difference in interest earnings between a 10% simple interest rate and a 7% compound interest rate with interest being compounded annually if Serenity invests her money for 25 years. Round the answer to the two decimal places as needed.

Answer 1

To calculate the simple interest, we use the formula:

Interest = Principal * Rate * Time

For the simple interest rate of 10% over 25 years:

Interest = $25000 * 10% * 25 = $62500

To calculate the compound interest, we use the formula:

Compound Interest = Principal * (1 + Rate)^Time - Principal

For the compound interest rate of 7% over 25 years:

Compound Interest = $25000 * (1 + 7%)^25 - $25000

Let's calculate the compound interest:

Compound Interest = $25000 * (1 + 0.07)^25 - $25000
= $25000 * (1.07)^25 - $25000
= $25000 * 3.86968488214 - $25000
= $96742.12 - $25000
= $71742.12

Now, let's find the difference between the interest earnings:

Difference = Compound Interest - Simple Interest
= $71742.12 - $62500
= $9242.12

Therefore, the difference in interest earnings between a 10% simple interest rate and a 7% compound interest rate, with interest being compounded annually, if Serenity invests her money for 25 years, is $9242.12.

Answer 2

That is incorrect

Answer 3

Apologies for the incorrect calculations. Let's recalculate the interest earnings correctly.

For simple interest, the formula is still:

Interest = Principal * Rate * Time

Interest = $25000 * 10% * 25
Interest = $25000 * 0.10 * 25
Interest = $62500

For compound interest, the formula is:

Compound Interest = Principal * (1 + Rate)^Time - Principal

Compound Interest = $25000 * (1 + 7%)^25 - $25000
Compound Interest = $25000 * (1 + 0.07)^25 - $25000
Compound Interest = $25000 * (1.07)^25 - $25000
Compound Interest = $25000 * 2.60103266533 - $25000
Compound Interest = $65025.82 - $25000
Compound Interest = $40025.82

Now, let's find the difference in interest earnings:

Difference = Compound Interest - Simple Interest
Difference = $40025.82 - $62500
Difference = -$22474.18

Therefore, the correct difference in interest earnings between a 10% simple interest rate and a 7% compound interest rate, with interest being compounded annually, if Serenity invests her money for 25 years, is -$22,474.18.

Answer 4

Answers for this practice areeeee..
1. 2,160
2. 36,600
3. 15'919.20
4. 2
5. 48,185.13
Enjoyy(つ≧▽≦)つ

Answer 5

number 5 was wrong.... here are the correct answers :)

1. 2,160
2. 36,600
3. 15'919.20
4. 2
5) 48,185.82