Asked by Tammara Bazor on May 09, 2024
Verified
Compound interest means that you earn:
A) Interest only on the initial amount invested.
B) Interest on the initial principal only.
C) Interest on both the principal and prior reinvested interest.
D) A decreasing amount of interest each year.
E) The same amount of interest each year.
Compound Interest
Interest on a loan or deposit calculated based on both the initial principal and the accumulated interest from previous periods.
Reinvested Interest
Reinvested interest is the compounding of interest by adding the payments back to the principal amount instead of paying it out, thereby increasing the total interest earned over time.
- Understand the principles of compound interest and how it differs from simple interest.
Verified Answer
GT
gavin thompsonMay 16, 2024
Final Answer :
C
Explanation :
Compound interest is the interest on a loan or deposit calculated based on both the initial principal and the accumulated interest from previous periods. This means you earn interest not just on your original investment, but also on the interest that has been added to it over time.
Learning Objectives
- Understand the principles of compound interest and how it differs from simple interest.
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