Given the same principal amount, at the same rate over the same period of time, does simple or compound interest earn a higher return?
Explanation
Answer: D - Compound interest earns more because it is interest earned on the principal amount and any interest accrued up to that point in time. For example, Jack invested $5,000 into a high-yield savings bond for 20 years at an interest rate of 12%. If he earned simple interest on the investment, at the end of the 20-year term he would have $17,000. But, if he earned compound interest, at the end of the term he would have $48,231.47.
