I can’t believe I’m getting lectured on simple vs. compound interest when he can’t realize the loan column is compound interest. It’s more for the benefit of others, so people realize how incorrect the statements are.
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Are you seriously thinking the loan interest in the illustration is simple interest?
In year 2, the loan amount is $80,000. The accumulated loan amount is $84,000. Year 3, the loan amount is $80,000. If it was simple interest, the accumulated loan total would be $168,000. The accumulated loan amount is $172,200. The extra $4,200 is the $4,000 interest from the prior year, since it’s not being paid off plus another $200 for interest on the interest. Interest on interest is compound interest.