Thinking Mathematically (6th Edition)

Published by Pearson
ISBN 10: 0321867327
ISBN 13: 978-0-32186-732-2

Chapter 8 - Personal Finance - 8.4 Compound Interest - Exercise Set 8.4: 59

Answer

With simple interest, the principle amount of money which is invested earns a certain rate of interest after a certain period of time. With compound interest, the principle amount of money which is invested earns a certain rate of interest after a certain period of time. However, the interest earned is added to the principle amount of money at the end of each period, and additional interest is earned on the interest that is added.

Work Step by Step

With simple interest, the principle amount of money which is invested earns a certain rate of interest after a certain period of time. With compound interest, the principle amount of money which is invested earns a certain rate of interest after a certain period of time. However, the interest earned is added to the principle amount of money at the end of each period, and additional interest is earned on the interest that is added.
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