ECONOMICS (CBSE/UGC NET)

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: -Compound interest is the interest on a deposit calculated based on both the initial principal and the accumulated interest from previous periods.

Detailed explanation-3: -Compound interest is calculated on the principal amount and the accumulated interest of previous periods, and thus can be regarded as “interest on interest.”

Detailed explanation-4: -Compound interest is the interest calculated on the principal and the interest accumulated over the previous period. It is different from simple interest, where interest is not added to the principal while calculating the interest during the next period. In Mathematics, compound interest is usually denoted by C.I.

Detailed explanation-5: -It is calculated by multiplying the principal amount by one plus the annual interest rate raised to the number of compound periods, and then minus the reduction in the principal for that year. With compound interest, borrowers must pay interest on the interest as well as the principal.