Laica Monica M. Cardenio Gr.

11- OLMC

The future value was identified by using the given principal value of
₱260,000.00 with the interest rate of 2.5 % within 35 years. The principal value
can either be an investment or a loan. The future value is being presented in
two schemes, the simple interest and compound interest as clearly shown in
the table and graph.

We can observe that there is a constant growth in simple interest. In

this scheme, the amount of interest added in every year is based on the
starting amount. In relation to money and time in terms of the investment, the
graph of simple interest is a line. Thus, it shows a linear function.

While on the other hand, compound interest illustrates an exponential

growth. In connection, the graph shows exponential function. As the time goes
by, the interest rate increases. That is why in the graph, the compound interest
becomes wider as time increases.

The huge difference between the simple and compound interest is

vividly presented in the graph. As time increases, the gap between the two
graphs becomes wider. As we can see, it is advisable to use the interest
compounded annually than the simple interest if you are investing your
money. However, it is better to use the simple interest than the compound
interest if you are going to apply for a loan.