Question

Compound interest: Group of answer choices Allows for the reinvestment of interest payments. Does not allow...

Compound interest:

Group of answer choices

Allows for the reinvestment of interest payments.

Does not allow for the reinvestment of interest payments.

Is the same as simple interest.

Provides a value that is less than simple interest.

All of these

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Homework Answers

Answer #1

Ans Allows for the reinvestment of interest payments.

Compound interest Allows for the reinvestment of interest payments.

The interest that we receive on compound interest is more than the interest on simple interest. It helps in increasing the investment by way of compounding of interest.

Eg.

FV = Future Value
PV = Present Value
r = rate of interest
n= no of period
FV = PV (1 + r )^n
FV = 15555*(1+14.5%)^7
FV = 40133.63
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