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Compound interest is calculated using the:A.principal investment.B.principal deposit.C.principal plus simple interest.D.principal plus interest already earned.

Question

Compound interest is calculated using the:A.principal investment.B.principal deposit.C.principal plus simple interest.D.principal plus interest already earned.

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Solution

The correct answer is D. Compound interest is calculated using the principal plus interest already earned.

Here's a step-by-step explanation:

  1. The principal is the initial amount of money that you invest or loan.

  2. The interest is the money that you earn from the investment or owe on a loan.

  3. Simple interest is calculated only on the principal. For example, if you invest 1000witha51000 with a 5% annual interest rate, you would earn 50 in interest each year.

  4. Compound interest, on the other hand, is calculated on the principal plus any interest that has already been earned. So, if you were to invest $1000 with a 5% annual interest rate

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