Interest is either compound ( i.e. interest earns interest ) or simple ( i.e the prinipal earns the same amount annually ).
Compound :- 8526 @ 2.94% p.a. will grow to 9300.31 in 3 years.
Simple ;- 8526 @2.94% p.a. will become 9278 in 3 years ( i.e. 8526 +250.67+ 250.67 +250.67.
simple interest means interest rate x original amount. compound interest is interest rate x (principal balance+interest) therefore collecting interest on interest. it can't be both... not sure who said that...
I was told that this question was Compound Interest.
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