Question

if $1500 is deposited in an account that pays 4% intrest, what is the difference in amount after 3 years between the amount earned if the principal is compounded annually and the amount is earned calulated ussing simple interest?

Answer 1

That would be 180 dollars making it a total of 1680

I hope this helps

Answer 2

Simple interest : 1500*4%*3=$180
Compound interest : 1500(1+4%)^3=$1687. 296
Which is about 1687.30
Yet that is the total, not the interest so to find the compound interest simply subtract the total by the principle (A-P=I)
1687.30-1500=$187. 30 which is more than the simple interest which is because when the values are the same, compound interest is more.
The difference between the two numbers is $7.30