Simple versus Compound Interest For each of the following notes, calculate the simple interest due at the end of the term.

Now assume that the interest on the notes is compounded annually. Calculate the amount of interest due at the end of the term for each note.
Finally, assume that the interest on the notes is compounded semiannually. Calculate the amount of interest due at the end of the term for each note. What conclusion can you draw from a comparison of your results of each of the threescenarios?

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Rate Term Note Face Value (Principal) $20,000 20,000 20,000 4% 6% 890 6 years 4 years 3 years