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False. Interest upon interest is compounded interest

Q: Would the statement 'Simple Interest is interest earned on interest' be True or False?

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This answer is False!!

Not enough information. The interest earned depends on the capital (which is the only datum provided), on the interest rate, on the time (for example, how long you leave interest in your bank), and on whether simple or compound interest was agreed.

Thats what im wondering

With compound interest, in the second and subsequent periods, you are earning interest on the interest earned in previous periods. If you withdraw the interest earned at the end of every period, the two schemes will earn the same amount.

For the second (and subsequent) periods, if the interest is to be calculated for the original sum PLUS the interest earned so far then it is compound interest. If only the original amount earns interest in all periods then it is simple interest.

Related questions

It is interest on simply the original capital. After the first period, compound interest involves interest on the interest earned in previous periods and soit not simple.

A $5000 investment at an annual simple interest rate of 4.4% earned as much interest after one year as another investment in an account that earned 5.5% annual simple interest. How much was invested at 5.5%?

Simple interest is interest paid on the original principle only, Compound interest is the interest earned not only on the original principal, but also on all interests earned previously.

This answer is False!!

simple interest = principle (money) times the rate times the time

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

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

Not enough information. The interest earned depends on the capital (which is the only datum provided), on the interest rate, on the time (for example, how long you leave interest in your bank), and on whether simple or compound interest was agreed.

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Thats what im wondering

With compound interest, in the second and subsequent periods, you are earning interest on the interest earned in previous periods. If you withdraw the interest earned at the end of every period, the two schemes will earn the same amount.

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