Growth paths / Hypothetical
Simple interest or compounding?
Year-end value (USD), USD 8,000 start, 3% annual rate
- Simple interest total
- Compound interest total
Period-by-period model values (USD)
| Year | Simple interest total | Compound interest total |
|---|---|---|
| 0 | 8,000.00 | 8,000.00 |
| 1 | 8,240.00 | 8,240.00 |
| 2 | 8,480.00 | 8,487.20 |
| 3 | 8,720.00 | 8,741.82 |
| 4 | 8,960.00 | 9,004.07 |
| 5 | 9,200.00 | 9,274.19 |
| 6 | 9,440.00 | 9,552.42 |
Intermediate points are independently calculated from the same fixed example assumptions; zero-based vertical scale. No changing rates, fees or taxes.
Hypothetical model, not observed market data or a forecast. Assumptions above; original values and calculations below.
The compound total exceeds the simple total because retained earnings become part of the interest base. Distributions spent elsewhere would change total wealth.
Assumptions & original table
- All monetary amounts in this example are hypothetical U.S. dollars (USD), not current prices, quoted account terms or observed market data. Percentages, counts, time periods and index levels retain their stated units.
- Initial principal is a hypothetical USD 8,000.
- Annual rate is 3% for six years.
- Simple interest stays outside the interest-bearing base; compound interest stays inside.
| Hypothetical scenario | Calculated result (USD) |
|---|---|
| Simple interest total | 9,440.00 |
| Annual compound total | 9,552.42 |
