Mathematics, 03.12.2019 10:31 garyperry

What is the key difference between simple interest and compound interest, and how does this difference affect the effectiveness of each?

Answers: 3

Show answers

Answers

The simple interest is calculated only on the principal amount of a loan so it is relatively easier to calculate than the compound interest.

The compound interest is calculated on the principle amount plus the interest that the amount gets per compounding period up to the period of the loan. In other words, in compound interest we get, interest on interest.

This difference between the both, is the reason, we get more money in compound interest than simple one.

Let us take an example-

Suppose the principle is = $5000

r = 5% or 0.05

t = 5 years

Simple interest formula is :

$p\times r\times t$

=> $5000\times0.05\times5=1250$

So, total amount after 5 years will become = 5000+1250=6250 dollars.

-----------------------------------------------------------------------------------------

Lets check for compound interest where the interest is compounded annually.

p = $5000

r = 5% or 0.05

t = 5 years

n = 1

Compound interest formula is :

$A=p(1+\frac{r}{n} )^{nt}$

$A=5000(1+\frac{0.05}{1} )^{5}$

=> $A=5000(1.05)^{5}$

A = $6381.40

--------------------------------------------------------------------------------------------

We can see that we are getting more money in compound interest than the simple interest, for the same amount and same time period.

Answer from: kuehnkeegan

its Simple interest is based on the principal amount of a loan or deposit. In contrast, compound interest is based on the principal amount and the interest that accumulates on it in every period.

Step-by-step explanation:

Answer from: Quest

Your answer would be ahere is how: perimeter is how long all the sides are. in a rectangle, there are two sets of parallel sides. so, to find this, we would to the following.(15x2)+(4x2)30+838if you have questions ask! and mark me brainliest! i really wanna level up : 3

Answer from: Quest

B. because the 7 represents "seven times", x represents "a number", 12 represents "plus twelve", and -4 represents "minus four"
Which of the following best describes an algebraic expression 7 (x+ 12) -4

Which of the following best describes an algebraic expression 7 (x+ 12) -4

Another question on Mathematics

Mathematics, 21.06.2019 17:00

Shane can shovel the driveway in 4 hours, but if his sister it would take 2 hours. how long would it take taylor to shovel the driveway alone

Answers: 1

Answer

Mathematics, 21.06.2019 18:00

The given dot plot represents the average daily temperatures, in degrees fahrenheit, recorded in a town during the first 15 days of september. if the dot plot is converted to a box plot, the first quartile would be drawn at __ , and the third quartile would be drawn at __ link to graph: .

Answers: 1

Answer

Mathematics, 21.06.2019 18:00

Darian wants to build a regulation size pool table that is 9 feet in length.he plans he ordered are 18 by 36 inches. what is the scale factor of the dilation he must use to build a regulation pool table

Answers: 1

Answer

Mathematics, 21.06.2019 19:30

Acar started driving from city a to city b, distance between which is 620 miles, at a rate of 60 mph. two hours later a truck left city b and started moving towards city a at a rate of 40 mph. how many hours after the truck's departure will the two meet?

Answers: 1

Answer

You know the right answer?

What is the key difference between simple interest and compound interest, and how does this differen...

Questions