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because the financial thing doesnt always have to.

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15y ago

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What is the value of compound interest?

Compound interest increases the amount earned by adding credited interest to the principal, and interest will then be earned on that money as well. The longer the principal and interest remain in the account, the greater the earnings they will accrue.


What is meant by the term compound interest?

Compound interest means that the amount of interest earned during a period increases the principal, which is then larger for the next interest period.


Does the amount of interest earned each year increase decrease or stay the same in a simple interest account. What about in a compound interest account?

Simple interest: stays the same. Compound interest: increases.


Does the amount of interest earned each year increase decrease or stay the same in a simple interest account What about in a compound interest account?

Simple interest: stays the same. Compound interest: increases.


What is an amount of money earned on a principal called?

The amount of money earned on a principal called is interest


WHY does the compound interest earned each year increase?

Compound interest increases each year because interest is calculated on both the initial principal and the accumulated interest from previous periods. As time progresses, the interest earned in previous years adds to the principal, leading to a larger base amount on which future interest is calculated. This compounding effect results in exponential growth, meaning that the amount of interest earned grows at an increasing rate over time. Thus, the longer the investment remains, the more pronounced the increase in total interest becomes.


How is the amount of interest earned on an investment calculated?

The amount of interest earned on an investment is calculated by multiplying the principal amount invested by the interest rate and the time the money is invested for. This formula is typically expressed as: Interest Principal x Rate x Time.


What is the amount of money paid or earned for the use of money?

Interest is earned or paid for the use of money


The amount of the promissory note plus the interest earned on the due date is called the?

The amount of the promissory note plus the interest earned on the due date is called the maturity value.


When interest is added to the principal amount and then interest is calculated on this new amount the process is called?

The process you are describing is called compound interest. In compound interest, the interest earned on the principal amount is added to the principal, and subsequent interest calculations are based on this new total. This results in interest being earned on both the original principal and any previously accumulated interest. This method contrasts with simple interest, where interest is calculated only on the principal amount.


What is the percent charged or earned on an amount of money?

Rate of interest.


Is the amount of money paid or earned for the use of money?

Interest is earned or paid for the use of money