Which descriptions about simple interest and yearly compounded interest are true? Check all that apply.

~Only compound interest has an exponent in its formula.

~Simple interest is earned on principal and interest.

~Compound interest earns more money than simple interest at the same rate for the same amount of time.

~Simple interest earns more money than compound interest at the same rate for the same amount of time.

~Simple interest is only earned on the original principal investment.

~Only compound interest earns the same interest amount every year.

~Only simple interest uses time in its formula.

~Compound interest is earned on principal and interest.

Question

Mathematics

Matthew Jennings

21 November, 04:02

Which descriptions about simple interest and yearly compounded interest are true? Check all that apply.

~Only compound interest has an exponent in its formula.

~Simple interest is earned on principal and interest.

~Compound interest earns more money than simple interest at the same rate for the same amount of time.

~Simple interest earns more money than compound interest at the same rate for the same amount of time.

~Simple interest is only earned on the original principal investment.

~Only compound interest earns the same interest amount every year.

~Only simple interest uses time in its formula.

~Compound interest is earned on principal and interest.

+4

Answers (1)

Know the Answer?

Jesse Wong · Answer 1

The formula for compound interest is,

I = P x (1 + r) ^n - P

whereas for the simple interest,

I = Prt

(1) True

(2) True

(3) True

(4) True

(5) False

(6) False

(7) True