Q: How much less interest is earned at 6 percent simple interest for 5 years on a 10000 investment than a 6 percent rate compounded daily for 5 years?

Write your answer...

Submit

Still have questions?

Continue Learning about Math & Arithmetic

False. Interest upon interest is compounded interest

If compounded and assuming the amount was 3180 dollars, it would be 784 dollars.

Assuming that 1.5 refers to 1.5% and that the interest is compounded annually, the principal is 893.30

The formula to calculate the present amount including compound interest is A = P(1 + r/n)nt , where P is the principal amount, r is the annual rate expressed as a decimal , t is the number of years, and n is number of times per year that interest is compounded. Then A = 2100(1 + 0.045/12)(12 x 3) = 2100 x 1.0037536 = 2402.92 The amount of interest earned = 2402.92 - 2100 = 302.92

For compound interest F = P*(1 + i)^n. Where P is the Present Value, i is the interest rate per compounding period, and n is the number of periods, and F is the Future Value.F = (9000)*(1 + .08)^5 = 13223.95 and the amount of interest earned is 13223.95 - 9000 = 4223.95

Related questions

Interest = 2472

Total value = 20000*(1.06)2 = 22472 So interest = 2472

$2400

320

This is a term used while understanding the interest calculation for deposits. Compounded quarterly means - the interest would be compounded every quarter. Let us say you deposit $1000 in a bank @ 10% interest per year. One year = 4 quarters At the end of the 1st quarter: principal = 1000, Interest = 25 => Value of your investment at the end of the 1st qtr = $1025 At the end of the 2nd quarter: principal = 1025, Interest = 25.625 => Value of your investment at the end of the 1st qtr = $1050.625 If you see here, the interest earned here is 25.625 whereas the interest earned in the previous quarter was only $25. This is because for calculation of interest for the 2nd quarter, the interest earned in the first quarter would be added to the principal. Shorter the compounding interval more the interest earned.

When a financial product pays compounded interest the investor earns interest on interest earned. For example, when $1,000 is invested at a compounded rate of 5 percent the principal balance of the investment would increase to $1,050 at the end of year one assuming annual compounding of interest. In year two the investor would receive interest at 5 percent on $1,050 for an interest payment of $52.50 in year two. Money left to accumulate at compounded interest can grow tremendously over time (see Compounded Earnings: Making Your Money Work for You).Banks offer compounded interest on savings accounts and certificates of deposit. Another method of obtaining a compounded rate of interest can be achieved by buying US Treasury issued zero coupon bonds which offer the advantage of long dated paper and the ability to know upfront what the compounded rate of return will be (see Zero Coupon Bonds Explained: Locking in Long Term Profits).

False. Interest upon interest is compounded interest

Interest earned in a bank account is not an investment. It is considered an income. The money that you have in the bank account that earned the interest for you is considered the investment

350*0.025*5 = 43.75

Interest earned is computed by taking the principal amount and multiplying it by the rate and time and divided by the time taken. The interest in this case is 30.

$1324.80

If compounded and assuming the amount was 3180 dollars, it would be 784 dollars.