Question

If you are investing money, would you rather deposit into an account that earns simple interest or compound interest?

Answer 1

Answer:

Compound interest.

Step-by-step explanation:

-In compound interest, your money grows more rapidly as the interest already earned also earns a further interest over time for the term of the investment.

-While in simple interest, only the principal amount invested will earn interest over the investment's term>

#Let's say you invest $100 each in A(earning simple interest) and B(earning compound interest), take the term of  both investments to be 5 yrs with both subject to an annual rate of 10%:

-Get the investment amounts in both accounts at the end of 5 yrs:

$\#A\\A=PRT+P\\\\=100\times 0.1\times 5+100\\\\=150\\\\\#B\\A=P(1+i)^n\\\\=100(1+0.1)^5\\\\=161.05$

Hence, you notice that your earn more in compound interest keeping all other conditions similar.

Answer 2

Answer:

compound interest

i took the test, and i got this one correct.