Interest earned on funds compounds because in future years, interest is earned on _______.
A)future values
B)interest received in previous years only
C)the principal and interest received in previous years only
D)principal only

Question

Quizplus · Accepted Answer

Compounding Interest is the time for which people agree to invest their money, and the compound interest rate is the periodically compounded rate. The amount of money grows exponentially because the interest is compounded each year. The interest earned on funds compounds because future interests are earned on both the principal and interest received in previous years.

Interest Earned on Funds Compounds Because in Future Years, Interest