ECONOMICS
ECONOMIC DEVELOPMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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True
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False
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Either A or B
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None of the above
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Detailed explanation-1: -Interest is the excess cash received or repaid over and above the amount lent or borrowed. 3. Simple interest is computed on principal and on any interest earned that has not been withdrawn.
Detailed explanation-2: -Interest is payment for the use of money. It is the excess cash received or repaid over and above the amount of money lent or borrowed. For example, if you lend a friend $100 at the rate of 10 percent per year.
Detailed explanation-3: -Compound interest is computed on principal and on any interest earned that has not been paid or withdrawn. It is the return on (or growth of) the principal for two or more time periods.
Detailed explanation-4: -The time value of money means that a dollar received today may be worth more than the same dollar received in the future. The reason for this is that a dollar received today can be invested. It can earn a return.
Detailed explanation-5: -The time value of money is a concept that states a dollar today is always worth more than a dollar tomorrow (or a year from now). One reason for this is the opportunity costs of holding cash instead of investing in higher-return projects. It also arises due to inflation.