Compound and Simple Interest
How much interest would a person earn on a $34,000 investment at 6% interest compounded annually for 9 years? What would be the total amount at the end of that time?
$34,000 (1 + .06/1)^9 = $57,442.28 Total Amount= $57,442.28 Amount of money earned $57,442.28 - $34,000 = $23,442.28
How much interest would a person earn on an investment of $34,000 at 6% simple interest for 9 years? What would be the total amount at the end of that time?
34,000 x .06 x 9 = $18,360 interest 18,360 + 34,000 = $52,360 total
How much interest would a person earn on a $34,000 investment at 6% interest compounded quarterly for 9 years? What would be the total amount at the end of that time?
34000(1+.06/4)^36 = $58,110.74 total 58,110 - 34000 = $24,110.74 interest
What is the difference between compound and simple interest?
simple interest is the money you earn on deposits in the bank. Compound interest is interest that's paid on what you deposit in the bank + interest on your interest.
