Interest That Earns Interest | IB Math AA

A thousand pounds at five percent for three years, simple against compound. Simple interest adds fifty a year, every year, because it is always five percent of the original thousand. You finish on eleven fifty. Compound interest multiplies by one point oh five every year instead, so the interest itself starts earning interest. You finish on eleven fifty seven sixty three. After three years that is a gap of seven pounds sixty three, which sounds like nothing. Run the same money for thirty years and simple gives you two and a half thousand while compound gives you over four thousand three hundred. The gap is more than eighteen hundred pounds. Full video, with monthly compounding and solving for time and rate. Compound Interest Explained: IB Math AA, standard level and higher level.

Added 15 Aug 2026