ECONOMICS
COMPOUND INTEREST
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Interest
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Principal
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Term
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Rate
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Detailed explanation-1: -The amount paid to an entity for lending its money or letting another entity use its funds.
Detailed explanation-2: -Interest is the price you pay to borrow money or the cost you charge to lend money. Interest is most often reflected as an annual percentage of the amount of a loan. This percentage is known as the interest rate on the loan.
Detailed explanation-3: -Interest may be earned by lenders for the use of their funds or paid by borrowers for the use of those funds. Interest is often considered simple interest (based on the principal amount) or compound interest (based on principal and previously-earned interest).
Detailed explanation-4: -The sum of money you deposit into a savings account or borrow from a bank is called the principal. The fee to borrow money is called interest. When you borrow money you pay back the principal and interest to your lender.