ECONOMICS
COMPOUND INTEREST
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Simple Interest
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Compound Interest
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Either A or B
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None of the above
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Detailed explanation-1: -Compound interest is often best when you’re saving money because you’ll earn interest on interest. But if you’re taking out a loan, a simple interest loan may be the better option since it could lead to less costs overall.
Detailed explanation-2: -Simple interest loans can help you save, as long as you keep up to date with your payment schedule. Late payments can leave you paying more in interest. One late payment probably won’t have a significant effect, but if you make a habit of it, it will take longer and cost you more to repay the loan.
Detailed explanation-3: -When it comes to investing, compound interest is better since it allows funds to grow at a faster rate than they would in an account with a simple interest rate. Compound interest comes into play when you’re calculating the annual percentage yield. That’s the annual rate of return or the annual cost of borrowing money.