Question

$2,500 for 25 years at 2.75% annual simple interest

Answer 1

Answer:

4,218.75

Step-by-step explanation:

Lets say that P is your starting principal (spelled -pal and not -ple, because Your Money is Your Pal), r is the interest rate (expressed as a decimal), and Y is the number of years you invest. Then your future value will be:

P (1 + rY) (Simple Interest)

P (1 + r)Y (Annually Compounded Interest)

Note the two formulas give the same answer for one year. After that, compound interest takes off.