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3 years ago

Why is compound interest preferable to simple interest when investing?

Business

1 answer:

lions [1.4K]3 years ago

3 0

Answer:

O Compound interest pays interest both on the principal and the interest earned in each period.

Explanation:

Compound interest is preferred as it measures the interest on the principal amount and the accrued interest. In the compounding interest, the interest i.e. earned should be added to the principal in order to create the new principal amount. The interest earned at the closing of every year should be more than the last period as the principal amount rises at the starting of the period

Also, the interest earned via the compound interest should be grown much faster as we compared to the fixed rate interest

Therefore the last option is correct

You might be interested in

Define securitization.

Harman [31]

The word secure is a protected sounding word so it’s the process of securing something from a business to protecting something from terrorist BASICALLY protecting‍♂️

8 0

2 years ago

Select the four common tools managers use to analyze competitive intelligence and develop competitive advantages. SWOT Analysis

iragen [17]

Answer:

Competitive Advantage refers to those attributes which makes a company's products stand out in the market against those of it's competitors and helps it gain a competitive edge.

Managers usually use the following four tools to analyze competitive intelligence to develop competitive advantages:

Michael Porter's generic strategies
Michael Porter's five forces model
Value Chain analysis which aims to identify the value added at each level of production and assign extra importance to those stages which contribute immensely to a product's value.
SWOT Analysis which is strengths weaknesses opportunities and threats. To maximize strengths, identify and limit weaknesses, sense and grab opportunities and minimize or avoid threats.

3 0

2 years ago

Atlanta Company Spokane Company

liraira [26]

Answer:

C) Atlanta Company

Explanation:

Let's bear in mind that equity is an advantage that allows your company to buy and sell more.

So more equity means more ability to buy and sell and less the possibility of going bankrupt.

Liability on the other hand also gives advantage in trade r company , so more liability shows strongness of the company.

Now let's compare the equity and liability of the both companies

Atlanta Company

Total liabilities $ 429,000

Total equity 572,000

Spokane Company

Total liabilities $ 549,000

Total equity 1,830,000

The equity ratio is about 1:3

While liability is about 1:1.2

So Atlanta company has more riskier structure

5 0

2 years ago

What theory argues that free trade is beneficial, but that differences in factor endowments, not productivity, determine the pat

Mice21 [21]

Answer:

The correct answer is letter "A": Heckscher-Ohlin.

Explanation:

Named after Swedish economists Eli Heckscher (1879-1952) and Bertil Ohlin (1899-1979), the Heckscher–Ohlin theory states that countries should focus their efforts on producing and exporting those goods they are good at manufacturing and they should import the goods they struggle in making. The concept is based on both the productivity and non-productivity of nations and their best bequests.

8 0

3 years ago

Pronghorn Company issues 8,900 shares of restricted stock to its CFO, Mary Tokar, on January 1, 2020. The stock has a fair value

zysi [14]

Explanation:

The Journal entry is given below:-

A 1. On 1 January 2020

Unearned compensation Dr, $445,000

To Common stock (8,900 × $10) $89,000

To Paid-in Capital in Excess of Par -common stock $3,56,000

(Being the restricted stock is recorded)

2. On 31 December 2021

Compensation expenses Dr, ($445,000 × 1÷5) $89,000

To Unearned compensation $89,000

(Being the restricted stock is recorded)

B On 25 July 2024

Common stock $89,000

Paid-in Capital in Excess of Par -common stock $356,000

To compensation expenses $356,000

To unearned compensation $89,000

(Being the forfeiture is recorded)

7 0

3 years ago