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I'm thinking of bonds when answering this question.

The more frequent the compounding the better it will be for the lender.

The less frequent the compounding the better it will be for the borrower.

Lets use this example:

Interest = 10%

Principle = $1000

Compounding A = Annually

Compounding B = Quarterly

Time period = 2 years

A) At the end of the first year $100 in interest would have been made making the balance $1100. At the end of the second year $110 would be earned because of compounding and the balance would be $1210.

B) At the end of the first year $103.81 in interest would have been earned with a ending balance of $1103.81. At the end of the second year the interest earned would be $114.59 and the ending balance would be $1218.40.

What I showed here is that if you are the one receiving the interest you would prefer daily compounding.

When you're paying out interest you would prefer simple interest.

Q: What is better for the consumer simple interest or compounded daily?

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It is 0.833... recurring % if the interest is simple, or compounded annually. If compounded monthly, it is approx 0.797 %

False. Interest upon interest is compounded interest

The simple interest, on an amount Y, at rate r% per year, for t years is I = Y*(r/100)*t But bank interest is always compounded, never simple.

If the 3% is "simple" interest, then the $100 earns an extra $18 in 6 years. If the interest is compounded yearly, then it earns $19.41 extra. If the interest is compounded weekly, then it earns $19.72 extra.

Simple interest of £3000 over 5 years: 3000*0.035*5 = £525 Compounded interest of £3000 over 5 years: 3000*(1.035)^5 -3000 = £563.06 rounded to the nearest penny

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It is 0.833... recurring % if the interest is simple, or compounded annually. If compounded monthly, it is approx 0.797 %

False. Interest upon interest is compounded interest

That depends on how the interest works.Is it simple interest ? Is it compound interest ?If compound, then how often is it compounded ?8% simple interest turns $2 into $40 in 237.5 years .8% compound interest, compounded quarterly, does the job in 37.8 years .As you can see, it makes quite a difference.

With simple interest, it is 1.5% per month. If compounded, it is 1.389% approx.

The simple interest, on an amount Y, at rate r% per year, for t years is I = Y*(r/100)*t But bank interest is always compounded, never simple.

If the 3% is "simple" interest, then the $100 earns an extra $18 in 6 years. If the interest is compounded yearly, then it earns $19.41 extra. If the interest is compounded weekly, then it earns $19.72 extra.

Simple interest of £3000 over 5 years: 3000*0.035*5 = £525 Compounded interest of £3000 over 5 years: 3000*(1.035)^5 -3000 = £563.06 rounded to the nearest penny

Simple interest compounded annually and reinvested will yield 619173.64 before taxes.

It depends on whether the 4% interest is per annum or for 8 years altogether. Also, you have to see if it is a simple interest or compounded interest.

Simple interest (compounded once) Initial amount(1+interest rate) Compound Interest Initial amount(1+interest rate/number of times compounding)^number of times compounding per yr

It makes a difference how often the interest is compounded, and you haven't given that information. If it's compounded annually, then your 10,000 becomes 12,762.82 after 5 years. If it's compounded quarterly, then it becomes 12,820.37 . If it's compounded "daily", then it becomes 12,840.03 . If it's "simple" (uncompounded) interest, then 10,000 swells to a full 12,500 in 5 years.

A+ Simple Interest