Assuming no withholding tax for simplicity, with simple interest, they would earn $9,000 every year, the amount grows steadily but it is only based on the initial $180,000.

That interest can be paid on a simple or compound basis. Simple interest works like this: Let's say you deposit $1,000 in a savings account that's paying 10% interest. (Wouldn't that be nice ...

Simple interest is different from compound interest because it’s calculated based on the principal, or original deposit. Earned interest isn’t incorporated or reinvested into the principal ...

As the table shows, interest of £100 is received each year for the simple interest account (£1,000 x 10% = £100 per year). For compound interest, the interest is paid on the closing balance at ...

ChatGPT explained that with compound interest, “You pay interest on the original amount plus the interest that builds up over time. It’s like a snowball — it gets bigger and bigger.” ...

Now you pay back $115.76 — more than simple interest. The reason banks and other institutions use compound interest is that they make more money more quickly.