To answer this question, we first need to calculate the simple interest and then the compound interest.

1. Simple Interest Calculation:
The formula for simple interest is P*r*t, where P is the principal amount, r is the rate of interest, and t is the time in years.

So, simple interest = 8000 * 5/100 * 2 = $800

2. Compound Interest Calculation:
The formula for compound interest is P*(1 + r/n)^(nt) - P, where P is the principal amount, r is the rate of interest, n is the number of times interest applied per time period and t is the time in years.

In this case, as it is not mentioned how many times the interest is compounded per year, we will assume it is compounded annually (n=1).

So, compound interest = 8000 * (1 + 5/100)^2 - 8000 = $820

3. Difference in Interest:
The difference in interest = Compound interest - Simple interest = $820 - $800 = $20

So, Alex would have earned an extra $20 if he had invested his money at 5% pa compound interest.

Question

To answer this question, we first need to calculate the simple interest and then the compound interest.

1. Simple Interest Calculation:
The formula for simple interest is P*r*t, where P is the principal amount, r is the rate of interest, and t is the time in years.

So, simple interest = 8000 * 5/100 * 2 = $800

2. Compound Interest Calculation:
The formula for compound interest is P*(1 + r/n)^(nt) - P, where P is the principal amount, r is the rate of interest, n is the number of times interest applied per time period and t is the time in years.

In this case, as it is not mentioned how many times the interest is compounded per year, we will assume it is compounded annually (n=1).

So, compound interest = 8000 * (1 + 5/100)^2 - 8000 = $820

3. Difference in Interest:
The difference in interest = Compound interest - Simple interest = $820 - $800 = $20

So, Alex would have earned an extra $20 if he had invested his money at 5% pa compound interest.

Knowee AI · Accepted Answer

To answer this question, we first need to calculate the simple interest and then the compound interest.

1. Simple Interest Calculation:
The formula for simple interest is P*r*t, where P is the principal amount, r is the rate of interest, and t is the time in years.

So, simple interest = 8000 * 5/100 * 2 = $800

2. Compound Interest Calculation:
The formula for compound interest is P*(1 + r/n)^(nt) - P, where P is the principal amount, r is the rate of interest, n is the number of times interest applied per time period and t is the time in years.

In this case, as it is not mentioned how many times the interest is compounded per year, we will assume it is compounded annually (n=1).

So, compound interest = 8000 * (1 + 5/100)^2 - 8000 = $820

3. Difference in Interest:
The difference in interest = Compound interest - Simple interest = $820 - $800 = $20

So, Alex would have earned an extra $20 if he had invested his money at 5% pa compound interest.

Alex invested $8000 at 5% pa simple interest for 2 years.How much extra interest would Alex have earned if he had invested his money at 5% pa compound interest?

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