Sandy received $10,000 red pocket money from her relatives in the recent Chinese New Year. She invested the whole amount in her bank that offers 6% compound annually interest over a 5-year period.

a. Would she have earned more interest if the bank offers 7% simple interest over a 5-year period? If so, how much more would she have earned?

b. How about if she invested over a 10-year period? Would she have earned more or less if the bank offers simple interest? And how much more or less would she have earned? (assume the interest rate stays the same)

I'm not sure how to handle this..

Answer rating: 100% (QA)

a To compare the interest earned between the two options we need to calculate the future value of th... View the full answer