Question

I have a problem I cant explain a single question maybe if I send you a picture?

Answer 1

first we will solve for simple interest,

principal is P = 1000 $

interest rate R = 5.5 %

time T = 5 years.

so, mple interest in five years is,

$SI=\frac{\text{PRT}}{\text{1}00}$$\begin{gathered} SI=\frac{1000\times5.5\times5}{100} \\ SI=275\text{ \ } \end{gathered}$

now for compound interest,

rate of interest is R = 5 %

the Amount after 5 years is

$A=P(1+\frac{R}{100})^T$$\begin{gathered} A=1000\times(1+\frac{5}{100})^5 \\ A=1000(\frac{105}{100})^5 \\ A=1000\times(1.05)^5 \end{gathered}$$A=1276.28$

so, the compound interest is

CI = A - P

CI = 1276.28 - 1000

CI = 276.28

the difference between simple interest and compound interest is

CI - SI

= 276.28 - 275

= 1.28 $

thus, the answer is 1.28 $ that is option C