Asked by
Alexandra Thiebault
on Dec 09, 2024Verified
Jessica invests $3,000 in an account that pays 5% simple interest. How much more could she have earned over a 7-year period if the interest had compounded annually?
A) $122.20
B) $129.20
C) $147.80
D) $171.30
E) $221.30
Compounded Annually
A technique for computing interest in which the interest accrued annually is compounded to the principal amount, resulting in a balance that not only expands but does so at an accelerating pace.
Simple Interest
A method to calculate interest where the interest payment is a fixed percentage of the principal amount that does not change over the life of the loan or investment.
Interest
Interest is the cost of borrowing money, expressed as a percentage of the borrowed sum, paid by the borrower to the lender for the use of the money over a specified period.
- Absorb the foundational concepts of compound and simple interest.
Verified Answer
HM
Learning Objectives
- Absorb the foundational concepts of compound and simple interest.