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Find the difference between simple interest and compound interest, compounded annually, on a deposit of $3,000 that earns 4.5% interest for 5 years.

Answer :

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The simple interest is 135$ per year, or 675$ total.
The compounded interest is 135$ the first year, 141.08$ the second year, 147.42$ the third year, 154.06$ the fourth year, and 160.99$ the fifth year, or 378.55$ total.

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