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how much more can you have in 57 years with compoudning vs simple interest when the...

how much more can you have in 57 years with compoudning vs simple interest when the interest rate is 8.9% abnd the principal is 500?

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Answer #1

Solution :-

Principal Amount = $500

Rate of Interest = 8.9%

Balance after 57 years as per simple interest = $500 + ( $500 * 8.9% * 57 )

= $500 + $2,536.50

= $3,036.50

Balance after 57 years as per Compounding interest = $500 * ( 1 + 0.089 )57

= $500 * 128.9998

= $64,499.92

Therefore Difference = $64,499.92 - $3,036.50 = $61,463.42

Therefore we have $61,463.42 more in account after 57 years as per compounding in comparison to simple interest

If there is any doubt please ask in comments

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