Abank made a farmer loan of $1,000 at 14% for 3 years compounded annually. find the future value and the compound interest paid on the loan. compare the compound interest with simple interest for the same period.
future value = $
compound interest = $
simple interest = $
compound interest is = $ more than simple interest.

Principal =  $1,000

Rate of interest = 14% = 0.14

Time = 3 years

A = Amount or future value

P = Principal

r = rate of interest in decimals

t = time

Substitute the values in the formula

Future Value is $1481.544

Compound interest = Amount - Principal = $1481.544- $1000 = $481.544

Formula of simple interest :

Substitute the values :

So, Simple interest = $420

Compound interest - Simple interest

= $481.544- $420

= $61.544

So, Compound Interest is $61.544 more than simple interest.

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