Question

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

Answer 1

Answer:

The true statements are in bold :

1. Only compound interest has an exponent in its formula. TRUE

The formula for compound interest is : $A=P(1+\frac{r}{n})^{t}$

The formula for simple interest is : $SI=\frac{P*R*T}{100}$

We can see the exponential power in compound interest formula.

2. Simple interest is earned on principal and interest. FALSE (SI is earned only on principal.)

3. Compound interest earns more money than simple interest at the same rate for the same amount of time. TRUE (This is clear with the formula given above)

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

5. Simple interest is only earned on the original principal investment. TRUE

6. Only compound interest earns the same interest amount every year. FALSE

7. Simple interest uses time in its formula. FALSE (both the formulas use time)

8. Compound interest is earned on principal and interest. TRUE

Answer 2

Answer:

Step-by-step explanation:

ONLY THE "TRUE" OPTIONS ARE LISTED BELOW

1.)Only compound interest has an exponent in its formula(TRUE)

((P*(1+i)^n) - P),

where P is the principal, i is the annual interest rate, and

n is the number of periods which is the exponential

2.)Compound interest earns more money than simple interest at the same rate for the same amount of time.(TRUE)

This is true because compound interest encompass simple interest in it's formula

3.)Simple interest is only earned on the original principal investment. (TRUE)

4.)Compound interest is earned on principal and interest.( TRUE)