ONE
    Númas
    ← Back to the programme
    IBMediumNumber7–9

    Compound Against Simple Interest

    Juro Composto Contra Juro Simples

    A savings account pays 3\% interest per year, compounded annually. A deposit of 800 euros is left untouched for 4 years. Find the balance after 4 years, to the nearest cent, and state how much more it is than the same deposit would earn at 3\% simple interest.

    Compound interest multiplies the balance by the same factor every year; simple interest adds the same amount every year. Identify that factor and that amount before doing any arithmetic.

    Solution

    Step 1 of 9

    1. 1.Compound: each year the balance is multiplied by 1.03.