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Sagot :
Part 1
Simple interest
we know that
The simple interest formula is equal to
[tex]A=P\mleft(1+rt\mright)[/tex]where
A is the Final Investment Value
P is the Principal amount of money to be invested
r is the rate of interest
t is Number of Time Periods
in this problem we have
P=$1,500
r=7.5%=0.075
t=4 years
substitute in the formula
[tex]\begin{gathered} A=1,500(1+0.075\cdot4) \\ A=\$1,950 \end{gathered}[/tex]Part 2
The compound interest formula is equal to
[tex]A=P(1+\frac{r}{n})^{nt}[/tex]where
A is the Final Investment Value
P is the Principal amount of money to be invested
r is the rate of interest in decimal
t is Number of Time Periods
n is the number of times interest is compounded per year
in this problem we have
P=$1,500
r=7.5%=0.075
t=4 years
n=1
substitute
[tex]\begin{gathered} A=1,500(1+\frac{0.075}{1})^{(1\cdot4)} \\ A=\$2,003.20 \end{gathered}[/tex]therefore
A better investment is a compound interest
Find out the difference
2,003.20-1,950=$53,20
so
Is earned $53,20 more
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