Compare financial model assumptions and outcomes
The following comparison concerns a term deposit
The initial deposit balance is $48,500. Let \(V_n\) be the value in dollars after \(n\) annual periods, with \(V_0\) as the initial value
The simple-interest and compound-interest models use the same annual rate of 5.9%
Model A is the simple-interest model; model B is the compound-interest model. The comparison horizon is 4 complete years
Retain full precision between model updates. Round each requested monetary result only at the end to the nearest cent. Rates and rules remain fixed over the stated interval; there are no fees or other transactions
For an interest table, report the accumulated interest: future value minus initial value. The numerical comparison criterion is the larger investment balance under these assumptions, not a recommendation about a real financial product