Under which of the following conditions will a future value calculated with simple interest exceed a future value calculated with compound interest at the same rate?
A) The interest rate is very high.
B) The investment period is very long.
C) The compounding is annually.
D)This is not possible with positive interest rates.

Question

Quizplus · Accepted Answer

It is not possible for a future value calculated with simple interest to exceed a future value calculated with compound interest at the same rate, regardless of the interest rate, investment period or compounding frequency. This is because compound interest takes into account the interest earned on the interest, leading to a greater accumulation over time compared to simple interest.

Under Which of the Following Conditions Will a Future Value