part 4: reflection\n1. which type of interest grows faster: simple or compound? why?\n2. how could compound…
part 4: reflection\n1. which type of interest grows faster: simple or compound? why?\n2. how could compound interest help you build savings over time?
Answer
Brief Explanations:
- Compound interest grows faster because it earns interest on both the principal and the accumulated interest over time. Simple interest only earns interest on the principal amount.
- Compound interest helps build savings over time as the interest earned is added to the principal, and in subsequent periods, interest is calculated on the new, larger amount. This snow - ball effect leads to exponential growth of the savings.
Answer:
- Compound interest grows faster. It earns interest on principal and accumulated interest, while simple interest only on principal.
- Interest is added to principal, and future interest is calculated on the larger amount, leading to exponential growth of savings.