Asked by David Moreno on May 09, 2024
Verified
Compound interest earns more than simple interest at the same interest rate because compounding pays interest on the interest earned.
Compound Interest
Interest that is earned on the money deposited into an account plus previous interest.
Simple Interest
Simple interest is a calculation of interest on the principal amount of a loan or deposit, based on a fixed interest rate and period, without compounding.
- Assess future savings potential through various compounding intervals.
- Consider the effect of differing compounding intervals on the amplification of investment returns.
Verified Answer
KC
Kimberly CamachoMay 12, 2024
Final Answer :
True
Explanation :
Compounding interest reinvests the interest earned and earns additional interest, leading to a higher overall return than simple interest.
Learning Objectives
- Assess future savings potential through various compounding intervals.
- Consider the effect of differing compounding intervals on the amplification of investment returns.
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