Answer:
annually compounded interest at 7. 5% for three years will pay more by $22.97
Explanation:
Simple interest
A = P (1+ rt)
A = final amount
P = initial principal balance
r = interest rate
t = number of time periods elapsed
A = 10000(1+0.08x3) = $12,400
Annual compound interest
A = P (1+ r/n)^nt
A = final amount
P = initial principal balance
r = interest rate
n = number of times interest applied per time period
t = number of time periods elapsed
A = 10000(1+0.075/1)^(1x3) = $12,422.97
$12,422.97 - $12,400 = $22.97
