Answer: $ 159.6572
Step-by-step explanation:
Here, the principal amount = $ 12,585
Annual rate of percent = 3.5 %
Time = 5 years
Thus, the simple interest for 5 years in this amount,
\(I_1= \frac{12585\times 3.5\times 5}{100}\)
\(I_1= \frac{220237.5}{100}\)
\(I_1=2202.375\)
While the compound interest for 5 years in this amount,
\(I_2=12585(1+\frac{3.5}{100})^5-12585\)
\(I_2=12585(1+0.035)^5-12585\)
\(I_2=12585(1.035)^5-12585\)
\(I_2=12585(1.18768631)-12585\)
\(I_2=14947.0322-12585=2362.0322\)
Hence, the required difference,
\(I_2-I_1=2362.0322-2202.375=159.6572\)
Thus, he will get $ 159.6572 more compound interest rather than simple interest.
