1 answer
(click or scroll down)
To calculate the difference in financial gains when investing with simple interest and compound interest, we'll first calculate the amount gained with each type of interest.
For simple interest:
Interest = Principal * Rate * Time
Interest = $3,200 * 0.045 * 8
Interest = $1,152
Total amount with simple interest = Principal + Interest = $3,200 + $1,152 = $4,352
For compound interest:
Total amount with compound interest = Principal * (1 + Rate)^Time
Total amount with compound interest = $3,200 * (1 + 0.045)^8
Total amount with compound interest ≈ $4,584.36
Difference in financial gains = Total amount with compound interest - Total amount with simple interest
Difference in financial gains ≈ $4,584.36 - $4,352 ≈ $232.36
So the closest option is $231.57, which is the correct difference in financial gains.