Jim and Bill each invest $15,000 into savings accounts that earn 3.5% interest. Jim's account earns simple interest and Bill's account earns compound interest. After 25 years, who will earn more interest and how much more will he earn?

Bill will earn more interest

He will earn $ 20,448.67 from his investment

Step-by-step explanations

Firstly let us calculate Jim's earnings based on simple interest

A = P (1 + rt)

Calculation:

First, converting R percent to r

a decimal

r = R/100 = 3.5%/100 = 0.035 per year.

Solving our equation:

A = 15000 (1 + (0.035 * 25)) = 28125

A = $28,125.00

The total amount accrued, principal plus interest, from simple interest on a principal of $15,000.00 at a rate of 3.5% per year for 25 years is $28,125.00 for Jim

Now let's us calculate bill's investment based on compound interest

Equation

A = P (1 + r) ^t

A=15000 (1+0.035) ^25

A=15000 (1.035) ^25

A=15000*2.36324498427

A = $ 35,448.67

We see that Bill will earn

$ 20,448.67 from his investment