document.write( "<A HREF=/cgi-bin/jump-to-question.mpl?question=703897>Question 703897</A>: <I><SPAN STYLE=\"word-break: break-all;\"> The differance between simple interset and compound interest of a sum oof money $48 at 20% p.a for 2 years . Find the principal..<BR>\n" );
document.write( "(Hint assume principal as100) </SPAN>\n" );
document.write( "</I><HR><TABLE width=100%><TR><TD><B><A HREF=http://www.algebra.com/>Algebra.Com's</A> Answer #433783 by </B><A HREF=/tutors/aboutme.mpl?userid=KMST><B>KMST(5328)</B></A><img src=\"/images/stars/stars-13.gif\" alt=\"\" >&nbsp;<A HREF=/tutors/aboutme.mpl?userid=KMST><IMG SRC=http://www.algebra.com/images/aboutme-small.gif BORDER=0 alt=\"About Me\" VALIGN=MIDDLE></A>&nbsp;<IMG SRC=http://www.algebra.com/cgi-bin/show-face.mpl?user=KMST><BR>You can <A HREF=\"/cgi-bin/embed-solution.mpl?show=1&solution=433783\">put this solution on YOUR website!</A><BR><SPAN STYLE=\"word-break: break-all;\"> Following the hint,<BR>\n" );
document.write( "if you calculate the interest earned on $100 both ways:<BR>\n" );
document.write( "simple 20% p.a. interest for 2 years,<BR>\n" );
document.write( "and 20% p.a. compounded annually for 2 years,<BR>\n" );
document.write( "you find that compounded interest gives you $4 more.<BR>\n" );
document.write( "To get $48 extra from such compounding, you would need to invest 12 times more, or $1200.\r<BR>\n" );
document.write( "\n" );
document.write( "To calculate on year's worth of interest at 20% p.a., we multiply the principal<BR>\n" );
document.write( "(the beginning balance) times <IMG STYLE=\"max-width:80%;\" SRC=/cgi-bin/plot-formula.mpl?expression=0.20 ALIGN=MIDDLE  ALT=\"0.20\"   DISABLED_style= \"max-width:90%; height:auto;\" >.<BR>\n" );
document.write( "$<IMG STYLE=\"max-width:80%;\" SRC=/cgi-bin/plot-formula.mpl?expression=100 ALIGN=MIDDLE  ALT=\"100\"   DISABLED_style= \"max-width:90%; height:auto;\" > at 20% interest for 1 year would earn $<IMG STYLE=\"max-width:80%;\" SRC=/cgi-bin/plot-formula.mpl?expression=20 ALIGN=MIDDLE  ALT=\"20\"   DISABLED_style= \"max-width:90%; height:auto;\" >.<BR>\n" );
document.write( " <BR>\n" );
document.write( "At 20% simple interest for 2 years, the second year interest would be calculated as another $<IMG STYLE=\"max-width:80%;\" SRC=/cgi-bin/plot-formula.mpl?expression=20 ALIGN=MIDDLE  ALT=\"20\"   DISABLED_style= \"max-width:90%; height:auto;\" >, based on the starting $<IMG STYLE=\"max-width:80%;\" SRC=/cgi-bin/plot-formula.mpl?expression=100 ALIGN=MIDDLE  ALT=\"100\"   DISABLED_style= \"max-width:90%; height:auto;\" >.<BR>\n" );
document.write( "The total interest for the 2-year period would be $<IMG STYLE=\"max-width:80%;\" SRC=/cgi-bin/plot-formula.mpl?expression=20 ALIGN=MIDDLE  ALT=\"20\"   DISABLED_style= \"max-width:90%; height:auto;\" >+$<IMG STYLE=\"max-width:80%;\" SRC=/cgi-bin/plot-formula.mpl?expression=20 ALIGN=MIDDLE  ALT=\"20\"   DISABLED_style= \"max-width:90%; height:auto;\" >=$<IMG STYLE=\"max-width:80%;\" SRC=/cgi-bin/plot-formula.mpl?expression=40 ALIGN=MIDDLE  ALT=\"40\"   DISABLED_style= \"max-width:90%; height:auto;\" >.<BR>\n" );
document.write( " <BR>\n" );
document.write( "If the interest was compounded annually,<BR>\n" );
document.write( "the balance at the end of the first year,<BR>\n" );
document.write( "$<IMG STYLE=\"max-width:80%;\" SRC=/cgi-bin/plot-formula.mpl?expression=100 ALIGN=MIDDLE  ALT=\"100\"   DISABLED_style= \"max-width:90%; height:auto;\" >+$<IMG STYLE=\"max-width:80%;\" SRC=/cgi-bin/plot-formula.mpl?expression=20 ALIGN=MIDDLE  ALT=\"20\"   DISABLED_style= \"max-width:90%; height:auto;\" >=$<IMG STYLE=\"max-width:80%;\" SRC=/cgi-bin/plot-formula.mpl?expression=120 ALIGN=MIDDLE  ALT=\"120\"   DISABLED_style= \"max-width:90%; height:auto;\" >,<BR>\n" );
document.write( "would be the new principal, used to calculate the interest on the second year.The interest for the second year would be<BR>\n" );
document.write( "$<IMG STYLE=\"max-width:80%;\" SRC=/cgi-bin/plot-formula.mpl?expression=120%280.20%29 ALIGN=MIDDLE  ALT=\"120%280.20%29\"   DISABLED_style= \"max-width:90%; height:auto;\" >=$<IMG STYLE=\"max-width:80%;\" SRC=/cgi-bin/plot-formula.mpl?expression=24 ALIGN=MIDDLE  ALT=\"24\"   DISABLED_style= \"max-width:90%; height:auto;\" >.<BR>\n" );
document.write( "That is an extra $<IMG STYLE=\"max-width:80%;\" SRC=/cgi-bin/plot-formula.mpl?expression=4 ALIGN=MIDDLE  ALT=\"4\"   DISABLED_style= \"max-width:90%; height:auto;\" > over what simple interest would yield.<BR>\n" );
document.write( "The $<IMG STYLE=\"max-width:80%;\" SRC=/cgi-bin/plot-formula.mpl?expression=4 ALIGN=MIDDLE  ALT=\"4\"   DISABLED_style= \"max-width:90%; height:auto;\" > for the second year comes from calculating interest on the interest<BR>\n" );
document.write( "already earned the first year.<BR>\n" );
document.write( "The $<IMG STYLE=\"max-width:80%;\" SRC=/cgi-bin/plot-formula.mpl?expression=4 ALIGN=MIDDLE  ALT=\"4\"   DISABLED_style= \"max-width:90%; height:auto;\" > is second year interest on the first year interest.<BR>\n" );
document.write( "That's called compounding the interest.<BR>\n" );
document.write( " <BR>\n" );
document.write( "NOTE:<BR>\n" );
document.write( "Interest can also be compounded monthly, daily, or continuously. </SPAN>\n" );
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