Simple Interest vs. Compound Interest

Simple interest remains constant throughout the term, while compound interest is computed on the principal and also on the accumulated past interest. (correct)

Simple interest is earned by the lender, while compound interest is paid by the borrower.

Simple interest is computed on the principal, while compound interest is a way to earn money using the original money as well as the interest.

Simple interest is calculated annually, while compound interest is calculated quarterly.

Lender or creditor (correct)

Principal

Borrower or debtor

Rate(r)

Amount of time in years the money is borrowed or invested

Date on which money is received by the borrower (correct)

Annual rate, usually in percent, charged by the lender

Date on which the money borrowed or loan is to be completely repaid

<p>Amount after t years that the lender receives from the borrower on the maturity date</p> Signup and view all the answers

<p>The amount of time in years the money is borrowed or invested</p> Signup and view all the answers

<p>Annual rate charged by the lender</p> Signup and view all the answers

<p>Amount of money borrowed or invested on the origin date</p> Signup and view all the answers