• The difference with compound interest is that the interest earns interest, not just the principal

• The benefit is that investments earn at a faster rate than if simple interest was being paid.

Example: calculate both simple and compound interest on $1000 at 3.6% for 5 years.

1.2/1.3 - Compound InterestSeptember-15-151:54 PM

Chap 1 - Investing Page 1

Chap 1 - Investing Page 2

Chap 1 - Investing Page 3