Travis invested $9,250 in an account that pays 6 percent simple interest. How much more could he have earned over a 7-year period if the interest had compounded annually

Answer: $773.58

Explanation:

From the question, we are told that Travis invested $9,250 in an account that pays 6 percent simple interest over a 7 year period.

We need to calculate the simple interest first. This will be:

= PRT/100

where

P = principal = $9250

R = rate = 6%

T = time = 7 years

Simple interest = (9250 * 6 * 7) / 100

= $388500/100

= $3885

Amount after 7 years will now be:

= $9250 + $3885

= $13135

If the interest was compounded annually, this will be:

FV = PV (1 + r) ^n

= $9,250 (1 + 0.06) ^7

= $13,908.58

Therefore, the difference will be:

= $13,908.58 - $13,135

= $773.58