To find: The amount A accumulated after investing a principal P for t years at an interest rate r compounded annually and for simple interest at the same rate r .
The amount is $4,353.56 .
The simple interest is $4,224 .
Given information:
It is given that P=$3200,r=8%,t=4 .
Concept Used:
Interest Computed Using Simple Interest If a principal P is invested at a fixed annual interest rate r , calculated at the end of each year, then the value of the investment after n years is A=P(1+rn) where r is expressed as a decimal.
Interest Computed Using Compound Interest
If a principal P is invested at a fixed annual interest rate r , calculated at the end of each year, then the value of the investment after n years is A=P(1+r)n where r is expressed as a decimal.
Calculation:
Here, P=$3200,r=0.08,t=4
Interest Computed Using Simple Interest
Substitute P for $3200 , r for 0.08 , and t for 4 , in A=P(1+rn) .
A=3200(1+(0.08⋅4))=3200(1.32)=$4,224
Interest Computed Using Compound Interest
Substitute P for $3200 , r for 0.08 , and t for 4 , in A=P(1+r)n .
A=3200(1+0.08)4=3200(1.08)4=$4,353.56
Hence, the interest Computed Using Simple Interest is $4,224 and interest Computed Using Compound Interest is $4,353.56 .
Chapter 3 Solutions
PRECALCULUS:GRAPHICAL,...-NASTA ED.
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