how much more interest is earned on an investment of $12,585 at 3.5% interest over 5 years if the interest…

Answer:

B. $159.65

Explanation:

Step1: Calculate simple - interest

The simple - interest formula is $I = Prt$, where $P$ is the principal amount, $r$ is the annual interest rate (in decimal form), and $t$ is the time in years. $P=$12585$, $r = 0.035$, $t = 5$. $I_{s}=Prt=12585\times0.035\times5=$2192.875$

Step2: Calculate compound - interest

The compound - interest formula is $A = P(1 + r)^{t}$, where $A$ is the amount of money accumulated after $n$ years, including interest, $P$ is the principal amount, $r$ is the annual interest rate (in decimal form), and $t$ is the number of years. $A = 12585\times(1 + 0.035)^{5}=12585\times(1.035)^{5}$. $(1.035)^{5}=1.035\times1.035\times1.035\times1.035\times1.035\approx1.187686$. $A = 12585\times1.187686\approx14937.55$. $I_{c}=A - P=14937.55−12585=$2352.55$

Step3: Find the difference

$I_{c}-I_{s}=2352.55 - 2192.875=$159.675\approx$159.65$