Hello, Sane!

If you took R50 000.00 and invested it at 7% compound interest per annum,

A) What amount of money would you have after 3 years?

B) How would this figure differ if it were not compound?

A) Compound interest formula: .

. . where: .

We have: .

Therefore: .

B) Simple interest formula: .

. . where: .

We have: .

Hence: . (interest)

Therefore, the future value is: .

Simple interest always generateslessinterest than compounding.