You will earn more interest from a given amount of bank saving deposit after 10 years with the compounding effect than without the compounding effect.

Question

Quizplus · Accepted Answer

With compounding effect, the interest earned from the deposit is added to the principal amount, resulting in a higher balance on which further interest can be earned. This cycle continues, resulting in a higher overall interest earned over a longer period of time, such as 10 years. Without compounding effect, the interest earned remains the same each year and is calculated based only on the initial principal amount.

You Will Earn More Interest from a Given Amount of Bank