Under which of the following conditions will a future value calculated with simple interest exceed a future value calculated with compound interest at the same rate?
A)the interest rate is very high.
B)the investment period is very long.
C)the compounding is annually.
D)this is not possible with positive interest rates.

Question

Quizplus · Accepted Answer

It is not possible for a future value calculated with simple interest to exceed a future value calculated with compound interest at the same rate because the compounding of interest in compound interest allows for the interest to earn interest, leading to a higher future value than simple interest.

Under Which of the Following Conditions Will a Future Value