Permalink Submitted by Anonymous on March 11, 2015

Dear John,
I'm struggling to understand the example for compound interest deception.
If the guy borrows 2000 sterling and has to pay back 2100 then annual interest rate is surely 5%.
Where is the 9% coming from? You use expression "true interest rate", am I missing the point?
I'm sorry if this is a bit blunt, I just like maths and to understand it, hence the challenge with deception for compound interest. Matt

## Compound Interest Deception

Dear John,

I'm struggling to understand the example for compound interest deception.

If the guy borrows 2000 sterling and has to pay back 2100 then annual interest rate is surely 5%.

Where is the 9% coming from? You use expression "true interest rate", am I missing the point?

I'm sorry if this is a bit blunt, I just like maths and to understand it, hence the challenge with deception for compound interest. Matt