Gavin has $7,500 to invest. he is considering two investment options. option a pays 4% simple interest. option b pays 3.15% interest compounded annually. drag dollar amounts to the table to show the value of each investment option after 4 years and after 6 years rounded to the nearest dollar.

Solution:

Principal =P= $ 7,500

Option A→(Simple interest)

Rate of interest= R=4%

Time()=4 years

Time()=6 years

Amount= Principal + Interest(Simple or compound interest)

Formula for Simple interest

Total amount after 4 years when interest is simple= 7500 +1200= $ 8700

Total amount after 6 years  when interest is simple= 7500 +1800= $ 9300

Option B

Formula for amount(A) when interest is 3.15% compounded annually.

Total amount after 4 years when interest is compounded annually=$ 8491 (approx)

Total amount after 6 years  when interest is compounded annually=$ 9034(approx)

4 years Option A: $8,700

6 years Option B: $9034