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Bob and Sarah invest $7000 eachfor 5 years.Bob invests his money at3.5%, simple interest andSarah invests her money at 3.5% interestcompounded annually.How much more interest will Sarah have earned thanBob at the end of the 5 years?A) $1225.80O $709080D) Sa8.80B) $1313.80

Sagot :

Bob investment

[tex]\begin{gathered} I=\frac{prt}{100} \\ I=\frac{7000\times3.5\times5}{100} \\ I=\frac{122500}{100} \\ I=\text{ \$}1225 \end{gathered}[/tex]

Sarah's investment

[tex]\begin{gathered} A=P(1+\frac{r}{n})^{nt} \\ A=7000(1+\frac{0.035}{1})^5 \\ A=7000\times1.18768630565 \\ A=8313.80413953 \\ I=8313.80413953-7000 \\ I=\text{ \$}1313.80413953 \\ \end{gathered}[/tex]

Difference(sarah interest - Bob interest) = 1313.80413953 - 1225 = 88.8041395281 = $88.80

Therefore, Sarah have $88.80 interest more than Bob.

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