Suppose the amount invested (or borrowed) is K,
Suppose the rate of interest is R% annually,
Suppose the amount accrues interest for Y years.
Then
the interest I is 100*K[(1 + R/100)^Y - 1]
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P(r/100)^2
It depends on whether it is simple or compound interest. The formula for simple interest is A = P(1+rt), where A = amount of money after t years, P = Principal, or the amount of money you started with, and r = the annual interest rate, expressed as a decimal (i.e. 7% = 0.07). For compound interest, the formula is A = P(1+r)t.
With compound interest, the interest due for any period attracts interest for all subsequent periods. As a result, compound interest, for the same rate, is greater.With compound interest, the interest due for any period attracts interest for all subsequent periods. As a result, compound interest, for the same rate, is greater.With compound interest, the interest due for any period attracts interest for all subsequent periods. As a result, compound interest, for the same rate, is greater.With compound interest, the interest due for any period attracts interest for all subsequent periods. As a result, compound interest, for the same rate, is greater.
9,938.20 * * * * * That would be correct only if banks charged simple interest as opposed to compound interest. Anyone believe that likely? The correct answer, when interest is compounded, is 7900*(1.043)6 = 10170.28
compound interest increases interest more than simple interest