Question

Statement $I$: In compound interest, the interest from the previous year contributes to the current year's interest.
Statement $II$: In simple interest, only the principal amount contributes to the current year's interest.

• A. Only statement $I$ is correct.
• B. Only statement $I$ is correct.
• C. Both statement $I$ and $II$ are correct.
• D. None of the statements is correct.

Answer 1

The correct option is C Both statement $I$ and $II$ are correct.

In compound interest, previous year's interest contributes to the interest of current year, while in simple interest, only the principal amount conributes to the interest of current year.