Question

how much more can you have in 57 years with compoudning vs simple interest when the interest rate is 8.9% abnd the principal is 500?

Answer 1

Solution :-

Principal Amount = $500

Rate of Interest = 8.9%

Balance after 57 years as per simple interest = $500 + ( $500 * 8.9% * 57 )

= $500 + $2,536.50

= $3,036.50

Balance after 57 years as per Compounding interest = $500 * ( 1 + 0.089 )⁵⁷

= $500 * 128.9998

= $64,499.92

Therefore Difference = $64,499.92 - $3,036.50 = $61,463.42

Therefore we have $61,463.42 more in account after 57 years as per compounding in comparison to simple interest

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