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Q: When interest is added to the principal and interest is again calculated on the new balance the process is known as compound interest?

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So you use the formula balance=principal(1+n over the number of years the the exponent ;0

Penalty interest is calculated from the required and projected balance

The formula for simple interest is Interest = Principal x Rate x Time ÷ 100 As the rate is an annual rate and the period is 1 year then Interest = Principal x 4.5/100. The balance at the year end = Principal + Interest = Principal x 104.5/100.

3000

This answer is False!!

Related questions

Interest rate on business loanis calculated on a decreasing balance technique: the principal gets decreased following every repayment term and the interest is calculated on the outstanding principal at the end of the term.

Simple interest is calculated on the principal only. If you have $1,000 and earn 5% interest per year, you will receive $50 at the end of year one. At the end of year two, you will receive another $50. And on it goes. With compound interest, you earn interest on the principal plus any interest you previously earned. Looking again at the previous example, at the end of year one you will still receive $50. At the end of year two, however, you will receive $52.50. Why? Because the 5% is paid on the principal PLUS the interest you previously earned. At the end of 10 years, you'll receive $77.57. After 20 years, $126.35. With simple interest you would still receive only $50.

So you use the formula balance=principal(1+n over the number of years the the exponent ;0

Penalty interest is calculated from the required and projected balance

capitalization. Capitalization is when all unpaid interest is added to the principal balance of your loan. Capitalization increases your total amount to be repaid because you will then have to pay interest on the increased principal amount.

The formula for simple interest is Interest = Principal x Rate x Time ÷ 100 As the rate is an annual rate and the period is 1 year then Interest = Principal x 4.5/100. The balance at the year end = Principal + Interest = Principal x 104.5/100.

3000

The formula for the daily compound interest is B=p(1+r over n)NT as an exponent for the nt B= ending balance P= principal amound r= interest rate n= number of compounds per year t= time( in years)

This answer is False!!

When you pay back a loan or mortgage, part of each payment is interest, the rest is principal. For the interest part you would have Interest Expense, for the principal part something like Mortgage Expense.

Compound interest

The interest rate is calculated on daily balance with regressive tier. The higher the balance, the more interest the customer earns. Also, fund transfer is allowed in this type of an account.