Question 1

What's the difference between simple and compound interest?

Accepted Answer

Simple interest calculates interest only on the principal. Compound interest calculates on both the principal and accumulated interest, yielding higher returns.

Question 2

What is the compound interest formula?

Accepted Answer

Compound interest formula: A = P(1+r/n)^(nt), where P is the principal, r is the annual rate, n is the compounding frequency, and t is the number of years.

Question 3

What is the Rule of 72?

Accepted Answer

Rule of 72: Divide 72 by the annual rate (percentage) to get the approximate number of years needed to double the principal.

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