Multiple choice

Charlie and Jennifer each deposited the same amount of money in Pure Point Financial company at compound interest and simple interest respectively, at the same rate of 10% per annum. Charlie earned $310 more than Jennifer by making an investment for a period 3 years. How much amount did each of them invest?

  1. $15,310
  2. $13,300
  3. $12,310
  4. $10,000
  5. $9,600
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Let P be the principal. Simple interest for 3 years at 10% is 0.3P. Compound interest is P(1.1^3 - 1) = 0.331P. The difference is 0.031P = 310, so P = 310 / 0.031 = 10,000.

AI explanation

The difference between the compound interest and simple interest for three years at 10% is calculated using the formula Difference = P * (r/100)^2 * (3 + r/100). Plugging in the known values gives 310 = P * (10/100)^2 * (3.1). Simplifying this equation results in 310 = P * 0.031, which means the principal amount invested by each is P = 310 / 0.031 = $10000.

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