In simple words, what are the differences of simple interest, compound interest and annuity?

Simple interest pays the same rate every year on only the initial amount invested.

Compound interest pays on the accumulated interest as well as the original investment.

http://www.basic-mathematics.com/simple-vs-compound-interest.html

An annuity is designed to pay the holder a fixed amount of money in regular payments.

http://www.investopedia.com/terms/a/annuity.asp#axzz2H8vy1uYv

thanks ms. sue:-)

You're welcome, Jp.

Sure! Let's break it down:

1. Simple Interest: Simple interest is the interest calculated only on the principal amount of money. It does not take into account any interest that has already been paid or earned. To calculate simple interest, you multiply the principal amount, the interest rate, and the time period.

2. Compound Interest: Compound interest is the interest calculated on both the principal amount and any accumulated interest from previous periods. This means that each time interest is calculated, it is added to the principal amount. Over time, compound interest can grow at an increasing rate, as the interest itself earns interest. To calculate compound interest, you need to know the principal amount, the interest rate, the time period, and the frequency of compounding (e.g., annually, quarterly, monthly).

3. Annuity: An annuity is a series of regular payments or receipts of a fixed amount over a specific period of time. It can be used for different purposes like retirement savings or loan payments. Annuities can be classified as either ordinary annuities or annuities due, depending on when the payments or receipts are made.

To summarize:

- Simple interest is calculated only on the principal amount.
- Compound interest takes into account the accumulated interest from previous periods.
- Annuity refers to regular payments or receipts of a fixed amount over a specified time period.

If you want to calculate any of these, you'll need the relevant formulas and the values for the principal amount, interest rate, and time period.