Answer: The simple interest will offer more money.
Step-by-step explanation:
Considering the simple interest offer, we would apply the formula for determining simple interest is expressed as
I = PRT/100
Where
I represents interest paid on the amount deposited.
P represents the principal or amount deposited
R represents interest rate
T represents the duration in years.
From the information given,
P = $1200
R = 0.12 = 0.12 × 100 = 12%
T = 3 years
I = (1200 × 12 × 3)/100 = $432
Total balance after 3 years is
1200 + 432 = $1632
Considering the compound interest offer, we would apply the formula for determining compound interest which is expressed as
A = P(1+r/n)^nt
Where
A = total amount in the account at the end of t years
r represents the interest rate.
n represents the periodic interval at which it was compounded.
P represents the principal or initial amount deposited
From the information given,
P = 1200
r = 0.08
n = because it was compounded 4 times in a year.
t = 3 years
Therefore,
A = 1200(1 + 0.08/4)^4 × 3
A = 1200(1 + 0.02)^12
A = 1200(1.02)^12
A = $1522
