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    Comparison Between Simple & Compound Interest

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    Joleen Joy B. Arquero
    The document compares simple and compound interest calculations over a 3 year period with an original principal of $5,000. For simple interest, the interest is calculated annually and added to the principal each year, resulting in $600 in total interest. For compound interest, interest is calculated semi-annually and added to the growing principal, so each period earns interest on the previous period's balance, resulting in $630.81 in total interest after 3 years.

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    Comparison Between Simple & Compound Interest

    Uploaded by

    Joleen Joy B. Arquero
    8 views1 page
    The document compares simple and compound interest calculations over a 3 year period with an original principal of $5,000. For simple interest, the interest is calculated annually and added to the principal each year, resulting in $600 in total interest. For compound interest, interest is calculated semi-annually and added to the growing principal, so each period earns interest on the previous period's balance, resulting in $630.81 in total interest after 3 years.

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    Comparison between Simple & Compound Interest

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    The document compares simple and compound interest calculations over a 3 year period with an original principal of $5,000. For simple interest, the interest is calculated annually and added to the principal each year, resulting in $600 in total interest. For compound interest, interest is calculated semi-annually and added to the growing principal, so each period earns interest on the previous period's balance, resulting in $630.81 in total interest after 3 years.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
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    Download as pdf or txt
    8 views1 page

    Comparison Between Simple & Compound Interest

    Uploaded by

    Joleen Joy B. Arquero
    The document compares simple and compound interest calculations over a 3 year period with an original principal of $5,000. For simple interest, the interest is calculated annually and added to the principal each year, resulting in $600 in total interest. For compound interest, interest is calculated semi-annually and added to the growing principal, so each period earns interest on the previous period's balance, resulting in $630.81 in total interest after 3 years.

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    SIMPLE INTEREST COMPOUND INTEREST

    Original Principal P 5,000.00 Original Principal P 5,000.00


    Interest on the first year 5,000.00 (0.04) P 200.00 Interest for the 1st 6mos 5,000 (0.02) P 100.00
    Interest on the second year 5,000.00 (0.04) P 200.00 Principal at the end of 1st 6mos 5,000 + 100 P 5,100.00
    Interest on the third year 5,000.00 (0.04) P 200.00 Interest for the 2nd 6mos 5,100 (0.02) P102.00
    Amount at the end of 3 years 5,000 + 200 + 200 + 200 P 5,600.00 Principal at the end of 2nd
    5,100 + 102 P 5,202.00
    6mos
    Less the original principal P 5,000.00 Interest at the end of 3rd 6mos 5, 202 (0.02) P 104.04
    Total Interest for 3 years P 600.00 Principal at the end of 3rd
    5, 202 + 104.04 P 5, 306.04
    6mos
    Interest at the end of 4th 6mos 5, 306.04 (0.02) P 106.12
    Principal at the end of 4th
    5, 306.04 + 106.12 P 5, 412.16
    6mos
    Interest at the end of 5th 6mos 5, 412.16 (0.02) P 108.24
    Principal at the end of 5th
    5, 412.16 + 108.24 P5, 520.40
    6mos
    Interest for the end of last
    5, 520.40 (0.02) P110.41
    6mos
    Amount at the end of 3 years 5,520.40 + 110.41 P5, 630.81
    Less original Principal P5,000.00
    Total compound interest for 3
    P 630.81
    years

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