Interest: Compound Interest
Adam and Joan each deposited $100 in their savings accounts. If Adam earns $$x$$% simple interest and Joan earns $$x$$% interest compounded annually, what is the difference between the interest earned by Adam and Joan after the first year in terms of $$x$$?
Incorrect.
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Incorrect.
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Incorrect.
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Incorrect.
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Correct.
Remember that the interest earned for the _first_ time period for any amount is the same for both _simple_ and _compound_ interest. This is so because the amount to which interest is applied is
the same in both cases. The interest earned for both cases will differ
only for future time periods.
Since the interest in Joan's account is only compounded annually, there is no difference between the two accounts after a single year, so the correct answer is D. No need to even calculate!
$$\$100x$$
$$\$x$$
$$\$\frac{x}{10}$$
$$\$\frac{x}{100}$$
$$\$0$$