Assume that you deposit $1,000 at a compound interest rate of 8% for 2 years. How...

Question

Question

Answer 1

Answer #1

For Compound Interest,

FV = PV * (1 + r)ⁿ

FV = $1000 * (1 + 8%)²

FV = $1000 * 1.1664

FV = $1,166.40

Interest = $1,166.40 - $1,000 = $166.40

For Compound interest,

Simple Interest = Principle * rate * Time

Simple Interest = $1000 * 8% * 2

Simple interest = $160

Difference = $166.40 - $160 = $6.40

Answer 2

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