The principal, P is $6 952.
Interest, R is 3.72% per year.
Time T = 16 years.
For simple interest, Amount A = P(1 + RT)
For compound interest, A = P(1+R)^T
a) If the money was saved as Simple Interest, Amount A
A = 6952 * (1 + 3.72% * 16)
A = 6952 * ( 1 + (3.72/100) * 16 )
A = 6952 * ( 1 + 0.5952)
A = 6952 * 1.5952
A = 11 089.8304
Amount if savings was simple interest, Amount at the end of 16 years =
$11 089.83
b) If the money was saved as Compound Interest, Amount A
A = 6952 * (1 + 3.72%)^16
A = 6952 * ( 1 + (3.72/100))^16
A = 6952 * ( 1 + 0.0372)^16
A = 6952 * 1.0372^16. Using your calculator.
A = 12 471.24735
Amount if savings was compounded interest, Amount at the end of 16 years =
$12 471.25
The question is was the amount saved as Simple Interest or Compound Interest?
It was not stated, but it is normal to use compound interest in real life.
I hope this helped.
