ECONOMICS
COMPOUND INTEREST
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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compound interest
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double interest
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simple interest
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not enough information
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Detailed explanation-1: -Compound interest is the interest on savings calculated on both the initial principal and the accumulated interest from previous periods.
Detailed explanation-2: -Essentially, compounding refers to earning interest on previously earned interest. Compound interest is calculated as a fixed percentage of both your initial deposit (principal) plus any interest earned during the previous compounding period.
Detailed explanation-3: -Here’s the simple interest formula: Interest = P x R x T. P = Principal amount (the beginning balance). R = Interest rate (usually per year, expressed as a decimal). T = Number of time periods (generally one-year time periods).
Detailed explanation-4: -Compound interest is interest calculated on an account’s principal plus any accumulated interest. If you were to deposit $1, 000 into an account with a 2% annual interest rate, you would earn $20 ($1, 000 x . 02) in interest the first year.
Detailed explanation-5: -Compound interest is the interest on a deposit calculated based on both the initial principal and the accumulated interest from previous periods. Or, more simply put, compound interest is interest you earn on interest . You can compound interest on different frequency schedules such as daily, monthly or annually.