Mathematics for IGCSE & O level - Percentages (Section 5 - No. 32)
Find the difference in interest earned by investing $500 for three years at 12% simple interest, or for three years at 10% compound interest.
$25
$19.50
$18.50
$20
Explication
Simple Interest: I = PRT = 500 * 0.12 * 3 = $180. Compound Interest: A = P(1 + r)^n = 500*(1.10)^3 = 665.50 - 500 = $165.50. Difference: 180 - 165.50 = $14.50. None of the answers are correct.