Question

Marisa and Miguel each invested $3000 for 8 years. Marisa invested her money at 4.5% simple interest and Miguel invested his money at 4.5% compounded annually. How much more interest will Miguel earn than Marisa?

Answer 1

Answer:

Therefore Miguel will earn $186 more that Marisa

Step-by-step explanation:

To solve for how much more interest Miguel earn than Marisa, we need to solve for their various investments individually and compare both results.

Given data

Principal p =  $3,000

Final amount A =  ?

Rate r=  4.5%

Time t =  8 years

Firstly applying the simple interest option for Marisa we have.

$A= P (1+rt)$

$A= 3000(1+0.045*8)\\A= 3000(1 + 0.36)\\A= 3000(1.36)\\A= 4,080$

Secondly let us solve the compounded interest for Miguel

$A= P(1+r)^{t} \\A= 3000(1+ 0.045)^{8} \\A= 3000(1.045)^8} \\A= 3000(1.422)\\A= 4,266$

Hence $4266- 4080=186$

Therefore Miguel will earn $186 more that Marisa