With ____ interest,the borrower always pays more money to the lender the following year.
A) principal
B) simple
C) compound
D) maximum

Question

Quizplus · Accepted Answer

With compound interest, the interest that accumulates each year is added to the principal, and interest is then calculated on the new total. This means that the borrower will pay more money to the lender the following year, as the interest is being calculated on a higher amount. Simple interest (option B) does not take into account accumulated interest, so the borrower would not necessarily pay more each year. Principal (option A) refers to the amount borrowed, but does not specifically address the interest rate or payments. Maximum (option D) is not relevant to this question.

With ____ Interest,the Borrower Always Pays More Money to the Lender