What is interest earned on both principal and previously earned interest?
compound interest. interest earned both on the original principal amount and on interest previously earned. discounting. the process by which the present value of future cash flows is obtained. discount rate.Click to see full answer. In this regard, which type of interest is earned on both the principal plus any previous interest earned?Compounding interest is…
compound interest. interest earned both on the original principal amount and on interest previously earned. discounting. the process by which the present value of future cash flows is obtained. discount rate.Click to see full answer. In this regard, which type of interest is earned on both the principal plus any previous interest earned?Compounding interest is to add interest to principal, earning interest on interest. Simple interest is where interest isn’t reinvested, principal stays at original amount, so interest earned is only on original principal.Also Know, what is the name of interest earned or paid on principal and previously earned or paid interest? Simple interest is paid out as it is earned and does not become part of an account’s interest-bearing balance. The invested amount is called principal. Let’s say you invest $100 (the principal) at a yearly interest rate of 5 percent. Multiplying the principal by the interest rate gives you an interest payment of $5. Thereof, when interest is paid on both the principal amount and prior interest earned this is called? Preview Flashcards Front Back Interest on interest refers to the interest earned on: prior interest payments Interest earned on both the initial principal and the reinvested interest from prior periods is called: e. compound interest. Simple interest is the interest earned on: the original principal amount invested What is earning interest on interest called? DEFINITION of Interest-On-Interest Interest-on-interest — also referred to as ‘compound interest’ — is the interest that is earned when interest payments are reinvested.
