Question

Please I need help with these 3 questions with explanation. See attached below.

Answer 1

Answer:

  18. compound interest

  19. simple interest

  20. simple interest

Step-by-step explanation:

For these problems, the initial balance is irrelevant. All that matters is the multiplier of that balance. For simple interest at rate r for t years, the multiplier is ...

  simple interest multiplier = (1 +rt)

For interest compounded annually, the multiplier of the initial balance is ...

  compound interest multiplier = (1 +r)^t

A spreadsheet can do the computations for you.

___

As an example of the computations involved, consider problem 19:

  simple interest multiplier = 1 + 0.13·6 = 1.78

  compound interest multiplier = 1.10^6 = 1.771561

The latter is less than the former, so the simple interest account will have the (slightly) greater balance at the end of 6 years.