Why is compound interest preferable to simple interest?

Compound interest pays at least double the interest on the princ

Compound interest is paid by the week or by the month, not only

Compound interest is based on the entire principal, not just a pe

Compound interest pays interest on the principal and the interes

Question

Madilynn Maxwell

Business

8 July, 19:15

Why is compound interest preferable to simple interest?

Compound interest pays at least double the interest on the princ

Compound interest is paid by the week or by the month, not only

Compound interest is based on the entire principal, not just a pe

Compound interest pays interest on the principal and the interes

+5

Answers (1)

Know the Answer?

Vincent Waller · Answer 1

Compound interest pays interest on the principal and the interest

Explanation:

Compound interest is preferred because it calculates interest on the principal amount and the accrued interest. In compounding interest, the interest earned in the period is added to the principal to become the new principal amount. Interest earned at the end of every year will higher than the previous period as the principal amount increases at the beginning of a period.

Interest earned by the compound interest method grows much faster compared to the fixed-rate interest method. Investors wishing to have better returns from their savings will prefer the compound interest method.