Tom has deposited $2,500 today in an account paying 6% per annum in interest. How much simple interest will Tom earn over a five year time horizon? Suppose interest is compounded annually at 6% p.a., how much interest-on-interest will Tom earn over a five year time horizon?

$750; $1095.56

$750; $845.56

$150; $195.56

None of the above