Suppose you are given $800 to invest. in one sentence, state which type of interest-10% simple interest or 9.5% interest compounded monthly - offers the best investment for a 5 year term. give a reason for your answer and provide accurate calculations to support your reasoning.

Question

Jaron Brewer

19 June, 08:32

+2

Answers (1)

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April Logan · Answer 1

Simple: 800 (1 + 0.10*5) = 800 (1.5) = $1200

Compound: 800 (1+0.095/12) ^ (12*5) = $1284

Compounding at 9.5% will give you the better investment.