When the interest from year one is built into the principal balance,the interest is referred to as

Question

Quizplus · Accepted Answer

Compound interest refers to the interest calculated on both the principal amount and any previously accumulated interest. This means that the interest from year one gets added to the principal balance, and then interest is calculated on the new amount. This process repeats for each year of the investment, leading to the accumulation of interest over time.

When the Interest from Year One Is Built into the Principal