Comparing Simple and Compound Interest Concepts

What is the primary difference between simple and compound interest?

• Simple interest can earn more over time than compound interest.

• Simple interest is calculated on the principal amount annually.

• Compound interest earns interest on both the principal and the previously earned interest.

• Compound interest is calculated only once at the end of the term.

What formula is used to calculate the total amount for simple interest?

• A = P(1 + rt)

• I = Prt

• A = P + I

• A = P(1 + r)^t

How is the total amount calculated for compound interest?

• I = Prt

• A = P(1 + r)^t

• A = P(1 + rt)

• A = P + I

In the retirement savings example, why should Jen choose Option B?

• Option B offers compound interest, which accumulates more over time.

• Option B requires a longer investment period.

• Option A has a lower interest rate.

• Option B has a higher initial principal.

After 20 years, how much more does Jen earn with Option B compared to Option A?

• $134.33

• $124.33

• $144.33

• $154.33

Who has more money after 15 years, Jason or Sean?

• Both have the same amount

• Cannot be determined

• Sean

• Jason

How much more money does Jason have compared to Sean after 15 years?

• $45.18

• $35.18

• $15.18

• $25.18

What is the total amount in Diego's accounts after 10 years?

• $10,419.30

• $11,419.30

• $9,419.30

• $12,419.30

What is the interest rate for Diego's account one?

• 4%

• 3.75%

• 2.5%

• 3.5%

Which interest type does Diego's second account use?

• Simple interest

• Compound interest

• Fixed interest

• Variable interest