Question

The concept of compound interest refers to: Multiple Choice earning interest on the original investment. payment of interest on previously earned interest. investing for a multiyear period of time. determining the APR of the investment.

Answer 1

Answer:

b. payment of interest on previously earned interest.

Explanation:

In economics, simple interest happens when the interest that is accumulated within a period is not added to the main amount of debt or investment. On the contrary, compound interest means that the interest accumulated during a certain period are summed to the principal sum of debt or investment, actually increasing the value of the loan or deposit.