II. DIRECTIONS: Answer the given questions:1. How is compound interest different from simple interest?2. Does the amount of interest earned in each year increase, decrease, or stay thesame in a simple interest account? In a compound interest account? Explain youranswers.
Answer (1)
Answer:1. Compound interest differs from simple interest in that it is calculated on the initial principal as well as on the accumulated interest from previous periods. In contrast, simple interest is only calculated on the original principal amount throughout the investment period.2. In a simple interest account, the amount of interest earned each year remains the same because it is always based on the original principal, which does not change. Conversely, in a compound interest account, the interest earned increases each year because interest is calculated on the growing total of principal plus accumulated interest, leading to exponential growth over time.Step-by-step explanation:
