Answer:
$7,839.57
Explanation:
Given:
Amount deposited = $12,000
Time = 20 years
Interest paid by Planters Bank = 5%
Now,
Simple interest is given as:
Interest = Principle × Rate × Time
or
Interest = $12,000 × 0.05 × 20
or
interest = $12,000
therefore
the total amount at the end of 20 years = $12,000 + $12,000 = $24,000
now for the Centura Bank
Interest rate = 5% compounded annually
The compound interest is given as:
Final amount = Principle × ( 1 + rate )ⁿ
here, n is the time period
therefore,
Final amount = $12,000 × ( 1 + 0.05 )²⁰
or
Final amount = $31,839.57
The difference in amount = $31,839.57 - $24,000 = $7,839.57
