To illustrate lets calculate Alexs investments future value with a simple interest rate and compare the results with the same amount invested with a compound interest rate. P the principal investment amount the initial deposit or loan amount r the annual interest rate decimal n the number of times that interest is compounded per unit t. Enter your principal in cell B2.
A 5000 1331.
I would choose option 1. The loan of Example 5 is for about of a year. T number of years for which investment is done 3 years. Enter the years 0-5 in cells A2 to A7.