Question

Which type of interest is earned on both the principal plus any previous interest earned?

Simple interest
Simple interest

Compound interest
Compound interest

Both simple and compound
Both simple and compound

Noe of the above

Answer 1

Which type of interest is earned on both the principal plus any previous interest earned?

Simple interest

Compound interest

Both simple and compound

Noe of the above

Answer 2

Compound interest

Explanation:

Compound interest is a type of interest that is earned on both the principal plus any previous interest earned.

This ultimately implies that, the interest are compounded either on a daily, weekly, quarterly, monthly or annual basis.

Mathematically, compound interest is given by the formula;

`A = P(1 + (r)/(n))^(nt)`

Where;

A is the future value.

P is the principal or starting amount.

r is annual interest rate.

n is the number of times the interest is compounded in a year.

t is the number of years for the compound interest.