Determine whether the statement is true or false. If it is true, explain why it is true. If it is false, give an example to show why it is false.

If compound interest is converted annually, then the accumulated amount after t years is not the same as the accumulated amount under simple interest over t yr.

Question

Determine whether the statement is true or false. If it is true, explain why it is true. If it is false, give an example to show why it is false.
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If compound interest is converted annually, then the accumulated amount after t years is not the same as the accumulated amount under simple interest over t yr.

Quizplus · Accepted Answer

Under compound interest A = P(1 + r)^t (m = 1), and under simple interest A = P(1 + rt). For example, if r = 7% , P = $1,000 , t = 3yr , so under compound interest A = 1,225 , and under simple interest A = 1,210.

Determine Whether the Statement Is True or False