Question

Compound interest means that interest is calculated on:.

Answer 1

Answer: initial principal

Step-by-step explanation:

Compound interest (or compounding interest) is interest calculated on the initial principal, which also includes all of the accumulated interest from previous periods on a deposit or loan.

Answer 2

Compound interest is interest calculated on an account's principal plus any accumulated interest. If you were to deposit $1,000 into an account with a 2% annual interest rate, you would earn $20 ($1,000 x. 02) in interest the first year. Assuming the bank compounds interest annually, you would earn $20.40 ($1,020 x. Compound interest is interest calculated on an account's principal plus any accumulated interest. If you were to deposit $1,000 into an account with a 2% annual interest rate, you would earn $20 ($1,000 x. 02) in interest the first year. Assuming the bank compounds interest annually, you would earn $20.40 ($1,020 x.