If you had a choice between investing $1,000 in a mutual fund that are 7.5% compound interest or a bond that earns simple interest at 7.5% which would you prefer and why

mutual fund

Step-by-step explanation:

Step one:

given data

let say the investment plan will span for 5 years

so  for mutual fund

P= $1000

r= 7.5%= 0.075

t= 5

compound interest

A= P(1+r)^t

substituting

$1436

so  for bond

P= $1000

r= 7.5%= 0.075

t= 5

simple interest

A= P(1+rt)

substituting

A=$1375

$1375

I would go for mutual fund compounded interest because it offers extra

$61 (1436-1375) for the same investment capital