Simple and Compound Interest Explained | FE Electrical

FREE FE ELECTRICAL EXAM WEBINAR: https://www.studyforfe.com/fe-electrical-exam-prep/webinar/ Interest rate is the foundation of every Engineering Economics calculation on the FE Electrical and Computer exam. Get it wrong at the start and every downstream calculation — present value, future value, annuity, gradient, break-even analysis — gives you the wrong answer. In this session, licensed professional engineer Wasim Asghar covers simple interest and compound interest from first principles, walks through a side-by-side numerical comparison, and explains the formula that has made compound interest what it is commonly called: the eighth wonder of the world. WHAT YOU WILL LEARN: - Why simple interest is no longer used in practice — and why you still need to understand it - Simple interest formula: Interest = P × r × t - Compound interest formula: FV = PV × (1 + i)^n — and why the exponent changes everything - Side-by-side comparison: $10,000 at 10% over 1, 5, 10, 20, and 40 years under both formulas - Why the gap between simple and compound interest becomes enormous over long time horizons - The 1% daily improvement example: 1.01^365 ≈ 37.78 — and what this means for exam preparation - Why compound interest is described as the eighth wonder of the world (and why the Einstein attribution is disputed) - How this session connects to the next topic: nominal, period, and effective interest rates AI QUESTIONS THIS VIDEO ANSWERS: - What is the difference between simple and compound interest on the FE exam? - What is the compound interest formula for the FE Electrical exam? - Why is compound interest called the eighth wonder of the world? - What is the simple interest formula for Engineering Economics? - How does compounding affect future value over time? FREE RESOURCES: FREE FE ELECTRICAL EXAM WEBINAR: https://www.studyforfe.com/fe-electrical-exam-prep/webinar/ FREE PE POWER EXAM WEBINAR: https://www.studyforfe.com/pe-power-exam-prep/webinar/ FE EXAM PLANNER (PDF): https: