Guide 2 (FDP): Ch. 7, 14 (Easy Practice Set), Page 160

[ctsai009]

when I calculate simple interest (Prt), I get $1000 as the loan balance. Add that to the principal ($1000) and I get $2000 total value.

When I calculate compound interest (P(1+r/n)^nt) I get 2,073.6, but why don't I add the principal like in simple interest so the total value is $3,073.6?

Thank you for your help!

[tommywallach]

Hey Christine,

That "1" in the equation you listed is where you're actually adding the principal already, see?

-t