Compound interest is calculated using the:A.principal investment.B.principal deposit.C.principal plus simple interest.D.principal plus interest already earned.
Question
Compound interest is calculated using the:
- A. principal investment.
- B. principal deposit.
- C. principal plus simple interest.
- D. principal plus interest already earned.
Solution
The correct answer is D. Compound interest is calculated using the principal plus interest already earned.
Here's a step-by-step explanation:
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The principal is the initial amount of money that you invest or loan.
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The interest is the money that you earn from the investment or owe on a loan.
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Simple interest is calculated only on the principal. For example, if you invest 50 in interest each year.
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Compound interest, on the other hand, is calculated on the principal plus any interest that has already been earned. So, if you were to invest $1000 with a 5% annual interest rate
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