# Question #3a28b

Aug 15, 2016

Simple interest = $18.75$
Compound interest = $18.87$

#### Explanation:

The question does not indicate whether it is compound or simple interest.

Let's look at both:
Simple interest

$S I = \frac{P R T}{100}$

$S I = \frac{500 \times 2.5 \times 18}{100 \times 12} \text{ 18 months} = \frac{18}{12} y e a r s$

$S I = 18.75$

It would be nice to have a unit of currency included as well.

Compound interest

$\text{Full Amount} = P {\left(1 + \frac{R}{100}\right)}^{n}$

$A = 500 {\left(1.025\right)}^{\frac{3}{2}} \text{ 18 months} = 1 \frac{1}{2} y r s = \frac{3}{2}$

$A = 518.57$ This is the full amount.

Interest = $518.87 - 500 = 18.87$