Question

Beatrice invests $1,430 in an account that pays 5 percent simple interest. How much more could she have earned over a 6-year period if the interest had been compounded annually?

Answer 1

Beatrice would have earned $57.33 over a 6-year period if the interest had been compounded annually.

What is interest?

• The fee paid for the privilege of borrowing money is called interest, and it is often stated as an annual percentage rate (APR).
• The compensation a lender or financial organisation receives for giving out money is called interest.
• The percentage of a stockholder's ownership in a corporation that is also referred to as interest.
• Simple and compound interest rates are the two basic types that can be used with loans.
• Simple interest is a predetermined percentage of the principal that was initially lent to the borrower that the borrower must pay in exchange for access to the funds.

Interest that is paid on a loan that includes both principal and compounding interest is known as compound interest. The second kind of interest is less typical than the first.

Now, calculating compound interest:

1430 (.05 × 6) + 1430 = 1859

1430 × $(1.05)^{6}$=  1,916.33

1916.33 - 1859 = 57.33

Know more about interest with the help of the given link:

https://brainly.com/question/26457073

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