Answered

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Which of the following is correct about compounding interest?

A. It allows you to earn interest on your total account balance, not just your contributions, which can significantly increase your savings over time.
B. It's really simple to compute; it's just the total of your contributions multiplied by the interest rate each period.
C. Compounding interest can't make as much money as simple interest.

Sagot :

GinnyAnsweridn

Final answer:

Compound interest allows earnings on total account balance, not just contributions, significantly increasing savings over time. Comparatively, simple interest is calculated only on the principal amount.


Explanation:

Compound interest is calculated on the principal plus the accumulated interest, allowing you to earn interest on your total account balance, not just your contributions. It can significantly boost your savings over time by accumulating interest on interest.

Simple interest, on the other hand, is calculated only on the principal amount. While simple interest is easy to compute, compound interest has the potential to earn more money over time by leveraging the power of compounding.


Learn more about Compound interest vs. Simple interest here:

https://brainly.com/question/37152955


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