SOLUTION: "Find the difference between the simple interest and the compound interest that would be earned from $1,000 invested for 2 years at 5{{{1/2}}}%."
I asked this question a few day
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-> SOLUTION: "Find the difference between the simple interest and the compound interest that would be earned from $1,000 invested for 2 years at 5{{{1/2}}}%."
I asked this question a few day
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Question 188472: "Find the difference between the simple interest and the compound interest that would be earned from $1,000 invested for 2 years at 5%."
I asked this question a few days ago, but I dont understand the answer that was given. So if anyone can explain it better that would be great.
Thank you (and sorry for having to ask it twice)
Answer given: 1,000(1+.055)^2
1,000(1.055)^2
1,000*1.113=$1,113.03 amount of the investment after 2 years. Found 2 solutions by Mathtut, stanbon:Answer by Mathtut(3670) (Show Source):
You can put this solution on YOUR website! normal interest is given by FV=P+Prt or FV=P(1+rt)
:
for compounded interest the formula is FV=P if compounded once a year
:
if compounded more it would be FV=P where n is the number of compounding periods.
:
http://www.moneychimp.com/articles/finworks/fmfutval.htm here is one page that might help on compounding
You can put this solution on YOUR website! "Find the difference between the simple interest and the compound interest that would be earned from $1,000 invested for 2 years at 5%."
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Simple interest:
I = Prt = 1000*0.05*2 = $100
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Compound interest:
I = P[(1+0.05)^2 - 1)]
I = 1000[1.05^2-1]
I = $102.50
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Cheers,
Stan H.
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