Question

Calculation of the Future Value of an amount of money, which is received today, is called as discounting.

True

False

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Compound interest is the interest earned on the subsequent periods on the interest earned in the prior periods.

True

False

Answer 1

Question-1

The Statement is FALSE

The calculation of the Future Value of an amount of money, which is received today, is called as Compounding.

Compounding is the process of calculating the interest earned in the future period on the interest earned in the prior period.

Discounting is the Process of calculating the Present Value of an amount to be received in future period.

Question-2

The Statement is TRUE

Compound interest is the interest earned on the subsequent periods on the interest earned in the prior periods.

Compounding is the process of calculating the interest earned in the future period on the interest earned in the prior period.