Compound interest

Hi kids,

we left this part of the unit before Christmas. It is quite important that you all understand what compound interest is, because I am afraid you will use it as adults.

First of all, I strongly recommend you to read about simple interest, we studied last year (See simple interest post).

Here you have a link with all the information (see compound interest).Have a look at the video if you still don't get:

The main difference between simple and compound interest is that with compound interest, we work out the interst for the first period, add it to the total, and then calculate the interest for the next period and so on. In the simple interest calculation we added the interest just at the end. I hope this video will help to remark the differences between simple and compound interest:

Take care,