Simple and Compound Interest You invest $1,000 for five years at 5% simple interest at Bank 1.

Question:

Simple and You invest $1,000 for five years at 5% simple interest at Bank 1. You invest $1,000 for five years at Bank 2 where interest at 5% is compounded annually. Compute the amounts that will be accumulated.

Compound Interest
Compound interest (or compounding interest) is interest calculated on the initial principal, which also includes all of the accumulated interest from previous periods on a deposit or loan. Thought to have originated in 17th century Italy, compound...