Answer:
Compound interest.
Step-by-step explanation:
-In compound interest, your money grows more rapidly as the interest already earned also earns a further interest over time for the term of the investment.
-While in simple interest, only the principal amount invested will earn interest over the investment's term>
#Let's say you invest $100 each in A(earning simple interest) and B(earning compound interest), take the term of both investments to be 5 yrs with both subject to an annual rate of 10%:
-Get the investment amounts in both accounts at the end of 5 yrs:
[tex]\#A\\A=PRT+P\\\\=100\times 0.1\times 5+100\\\\=150\\\\\#B\\A=P(1+i)^n\\\\=100(1+0.1)^5\\\\=161.05[/tex]
Hence, you notice that your earn more in compound interest keeping all other conditions similar.
