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March 30, 2017

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How much less interest is earned at 6% simple interest for 5 years on a $10,000 investment than a 6% rate compounded daily for 5 years?

  • Math - ,

    Interest on simple intereat part
    = PRT
    = 10000(.06)(5) = $3000

    at 6% per annum compounded daily

    amount = 10000(1 + .06/365)1825 = 13498.25
    or $3498.25 in interest

    so for the simple interest there would $498.25 less than the rate compounded daily.

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