All categories

2 years ago

Why does compound interest earn you a higher annual percentage yield

1 answer:

5 0

The reason compound interest earn you a higher APY on savings account is with compounding you earn interest on the money that has already earned interest.

With compound interest, interest is earned on the amount of money that has already earned an interest. On the other hand, with simple interest, interest is earned only on the principal.

Imagine that you deposit $100 in a savings account with an interest rate of 10% and annual compounding.

Value of the account in one year = 100 x (1.1) = 110

Value of the account in two years = 100 x (1.1)² = 121

Imagine that you deposit $100 in a savings account with an interest rate of 10% and simple interest.

Value of the account in one year = 100 + (100 x 0.1 x 1) = 110

Value of the account in two years = 100 + (100 x 0.1 x 2) = 120

To learn more about compound interest, please check: brainly.com/question/7420113

You might be interested in

An opportunity cost: Multiple Choice Is an unavoidable cost because it remains the same regardless of the alternativ

Diano4ka-milaya [45]

Answer:

Is the potential benefit lost by choosing a specific alternativecourse of action among two or more.

Explanation:

This question is incomplete. The complete question can be found here: https://www.chegg.com/homework-help/questions-and-answers/opportunity-cost--unavoidable-cost-remains-regardless-alternative-chosen-b-requires-curren-q10956439

Here is the complete question:

An opportunity cost:

Is an unavoidable cost because it remains the same regardless ofthe alternative chosen.

Requires a current outlay of cash.

Results from past managerial decisions.

Is the potential benefit lost by choosing a specific alternativecourse of action among two or more.

Is irrelevant in decision making because it occurred in the past.

Opportunity cost is the cost of the next best option forgone when one alternative is chosen over other alternatives.

An example of opportunity cost :

Martha has three options : Start her company, remain employed or go on vacation. If she leaves her job to start her company she would earn $5,000,000 per year. She earns $1 million where she works. She values vacation at $2 million.

If she decides to stay employed, her opportunity cost is $5 million. The amount she would have made if she started her company.

If she decides to start her company, her opportunity cost is $2 million. The amount she values vacation

Opportunity cost doesn't remain the same regardless of the option taken.

If martha wants to maximise profit , she would start her business because if yields the highest payoffs. Opportunity cost is relevant to making decisions.

I hope my answer helps you

8 0

3 years ago

A homeowner desires to sell his or her home and signs an exclusive-listing agreement, requiring payment of a six percent commiss

dem82 [27]

Answer: B. must pay a commission of $24,000 to the listing agent.

Explanation:

An exclusive listing agreement is a contractual agreement whereby a listing broker acts as the agent and in this case, the seller will pay a commission to the listing broker.

Since the homeowner has already signed an exclusive-listing agreement, which requires payment of 6% commission to the real estate agent but later finds a couple who purchases it for $400,000. In this case, the homeowner must still funlfil the terms of the contact and pay the listing agent the percentage that was agreed as commission and this will be:

= 6% × $400000.

= $24000

Therefore, $24000 must be paid to the listing agent.

3 0

3 years ago

__________ is the amount a business earns after deducting what it spends for salaries and other expenses.

Lana71 [14]

Answer:

profit

Explanation:

profit is a financial return or reward that an entrepreneur aims to achieve to reflect the risk it takes. Profit is also an important signal to other providers of finance to a business. Banks, suppliers and other lenders are more likely to provide finance to a business that can demonstrate that it makes a profit and that it can pay debts as they fall due.

4 0

3 years ago

When reviewing Form 13614-C, you see the "Interest" question is marked "Yes" and the taxpayer gives you a Form 1099-INT. You sho

Olenka [21]

Answer:

True

Explanation:

yes it is true that you should ask the taxpayer if they had any other interest income to avoid double taxation elsewhere

7 0

3 years ago

Key activities of supply management include negotiations, logistics, contract development and administration, inventory control

Archy [21]

The answer is true.

Supply management is one of the pillars of marketing. Supply management includes logistics, acquiring and managing resources either goods or services which are needed to run the organization. 
The main goals of the supply management are:

- Control costs
- Efficient allocation of resources
- Gathering sufficient information to be used in strategic business decisions.

3 0

3 years ago