The short answer to this question can simply be that compound interest is always the long-term favoured option as an exponential growth (compound interest) can very quickly overtake linear growth (simple interest).

Further explanation can evaluate the mathematical function comparing these specific interest quotations, to which we can show exactly after how many years does compound interest overtake simple interest. (generally we will still expect compound interest to be the long term better option).

You may continue to evaluate (though A-math syllabuses do not include a proper way to evaluate solutions of exponential on linear functions like the one I've shown), that the number of years before overtaking plays a role e.g. if my compound returns take 100 years to overtake my simple returns, I would not logically be able (or alive) to benefit from my compound returns and would rather just use simple interest. However, in this scenario two years is sufficient.