Mathematics, 21.10.2020 16:01 TheBugDa
Investigate the difference between compounding annually and simple interest
for parts a-j. Round to the nearest cent.
a. Find the simple interest for a 1-year CD for $5,000 at a 2.5% interest rate.
b. Find the interest for a 1-year CD for $5,000 at an interest rate of 2.5%,
compounded annually.
c. Compare the results from parts a and b.
d. Find the simple interest for a 3-year CD for $5,000 at an interest rate
of 2.5%.
e. Find the interest for a 3-year CD for $5,000 at an interest rate of 2.5%,
compounded annually.
f. Compare the results from parts d and e.
g. Find the simple interest for a 6-year CD for $5,000 at an interest rate of 2%.
h. Find the interest for a 6-year CD for $5,000 at an interest rate of 2%,
compounded annually.
i. Compare the results from parts g and h.
j. Is interest compounded annually the same as simple interest? Explain
Answers: 2
![A = 5000 (1 + \frac{0.025}{1})^{1*3}] \\A=5000(1.025)^3 \\A=5000(1.077)\\A= 5385](/tpl/images/0827/6485/3ac54.png)
![A = 5000 (1 + \frac{0.02}{1})^{1*6}] \\A=5000(1.12)^6 \\A=5000(1.9738) \\A= 9869](/tpl/images/0827/6485/b2efb.png)
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Investigate the difference between compounding annually and simple interest
for parts a-j. Round to...
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