Question

When difference between simple interest and compound interest?

Answer 1

Step-by-step explanation:

While both types of interest will grow your money over time, there is a big difference between the two. Specifically, simple interest is only paid on principal, while compound interest is paid on the principal plus all of the interest that has previously been earned.

As an investor or depositor, you definitely want to earn compound interest, as it adds up greater over time. In the example of the $1,000 five-year CD at 4%, a simple interest calculation would produce $200, $21 less than the monthly compounding.

Answer 2

Answer:

simple interest is based on the principle amount of a loan or deposit while compound interest is based on the principle amount and the interest that accumulates on it in every period

since simple interest is calculated only on the principal amount of a loan or deposit it's easier to determine then compound interest .