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#1 2009-08-07 23:29:51
- mehale
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- Registered: 2009-08-07
- Posts: 1
Compound Interest
Why does compounded interest rate change when time changes if the simple interest rate is constant? Example: Simple annual interest rate = 16.5%. Over 70 months compound rate = 12.25%, but over 40 months the compound rate = 14.05%
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#2 2009-08-07 23:53:58
- MathsIsFun
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- Registered: 2005-01-21
- Posts: 7,713
Re: Compound Interest
I imagine it is only "changing" because you are trying to achieve the same result as the simple interest. In that case it is because Compound Interest is "more powerful" as it also applies to the interest you have earned so far.
"The physicists defer only to mathematicians, and the mathematicians defer only to God ..." - Leon M. Lederman
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