Suppose I deposit $1,800 in an account for which simple interest of 10% is payable. How much money will I have in the account at the end of 20 years? A. How much would I have in the account if the interest compounded yearly instead? B.. Question 9 options: A. $3,600 and B. $13,910 A. $5,400 and B. $13,910. A. $5,400 and B. $12,110 A. 3,600 and B. $12,110

                                                 Accumulated sum

Simple interest                                   $5400    

Compound interest                         $12,109.4

Explanation:

Simple interest

Under simple interest only the principal earns interest

The accumulated sum using simple Interest

Accumulated sum = P + (P× R  × T)

Principal-  1,800, r- rate - 10%, n-period - 20

                                = $1,800 + (1800 × 10%  × 20)

                               = $5400

Compound interest

Under compound interest  is earning interest. The interest is calculated by multiplying the rate by the compound amount

Accumulated sum = P  (1+r)^n

Principal-  1,800, r- rate - 10%, n-period - 20

=  $1,800 ×(1.1)^(20)

= $12,109.4

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