Denzel Waskington is looking to invest $200,000 in a bank account, and he plans to leave the money there for the next 5 years. The bank offers him 8% interest compounded annually. Unfortunately, Denzel did not pay very much attention in his finance course at his University. Help Denzel understand annual compounding.

1. 1. Explain what compounded interest means in 1-2 sentences
2. 2. Show Denzel the difference between a $200,000 investment earning simple 8% interest and a $200,000 investment earning 8% compounded interest by building a table like table 5.1 (pg. 121).

Year	Beginning amount	Simple interest	Compounded interest	Total interest earned	Ending amount
1
2
3
4
5

1. c. Calculate total simple interest, total compounded interest and total interest earned (the sum of the corresponding columns in the table above). How much more did Denzel benefit by having interest compounded annually?