Question

Interest that is calculated using the principal plus any previously earned interest is known as _____ interest.

a) Simple
b) Compound
c) Accrued
d) Fixed

Answer 1

Compound interest is an interest rate calculation on the principal plus the accumulated interest. The formula for finding compound interest is Compound interest = Future Value - Present Value.

Step-by-step explanation:

Compound interest is an interest rate calculation on the principal plus the accumulated interest. To find the compound interest, you can use the formula Compound interest = Future Value - Present Value. For example, if you start with a principal amount of $100 and earn an interest rate of 5% for three years, the future value would be $115, and the compound interest would be $15.