Simple interest
$1,500.00
$10,000.00 at 5% a year for 3 years
- Principal (P)
- $10,000.00
- Interest (I)
- $1,500.00
- Total amount (A = P + I)
- $11,500.00
Interest per year
$500.00
Time in years
3
Simple vs. compound interest
| Method | Interest | Total amount |
|---|---|---|
| Simple interest | $1,500.00 | $11,500.00 |
| Compounded annually | $1,576.25 | $11,576.25 |
| Compounded monthly | $1,614.72 | $11,614.72 |
| Compounded daily | $1,618.22 | $11,618.22 |
Compounding monthly would earn $114.72 more (7.6% more interest), because each month's interest would start earning interest too.
- Simple interest $11,500
- Compounded monthly $11,615