ECONOMICS
SAVING AND INVESTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Compound Interest
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Simple Interest
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Either A or B
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None of the above
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Detailed explanation-1: -To calculate simple interest, multiply the principal amount by the interest rate and the time. The formula written out is “Simple Interest = Principal x Interest Rate x Time.” This equation is the simplest way of calculating interest.
Detailed explanation-2: -Simple interest is the interest calculated on the principal amount of a loan.
Detailed explanation-3: -Simple interest is the interest charge on borrowing that’s calculated using an original principal amount only and an interest rate that never changes. It does not involve compounding, where borrowers end up paying interest on principal and interest that grows over multiple payment periods.
Detailed explanation-4: -How Do You Find the Principal Amount? The formula for calculating the principal amount when there is simple interest is P = I / (RT), which is the interest amount divided by the interest rate times the amount of time.