Answer:
With simple interest = $1,604.2
With compound interest = $1,642.454
Explanation:
Data provided in the question:
Amount lend = $1,234
Time = 3 years
Rate of interest, r = 10% = 0.10
Now,
With simple interest :
Interest = Principle × Rate × Time
= $1,234 × 0.10 × 3
= $370.2
Therefore,
Total amount paid = Principle + Interest
= $1,234 + $370.2
= $1,604.2
With compound interest :
Amount to be paid = Principle × ( 1 + r )ⁿ
= $1,234 × ( 1 + 0.10 )³
= $1,234 × 1.1³
= $1,234 × 1.331
= $1,642.454
