F

V

$=$

P

V

$+$

$($

P

V

$\backslash$times

I

$\backslash$times

N

$)$

Identify whether the following statements about the simple and compound interest methods are true or false.

Statement

Everything else held constant, an account that earns compound interest will grow more quickly than an otherwise identical

account that earns simple interest.

After the end of the second year and all other factors remaining equal, a future value based on compound interest will

never exceed the future value based on simple interest.

All other factors being equal, both the simple interest and the compound interest methods will accrue the same amount of

earned interest by the end of the first year.