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Question

The calculation of interest on the interest of principal amount is called

A
simple interest
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B
compound interest
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C
multiple interest
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D
interest quarterly compounded
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Solution

The correct option is D compound interest
Simple interest=P×R×T100
Simple interest is calculated by multiplying Principle amount, rate of interest, time (years) and dividing it by 100
Now taking this interest and adding it to the principle amount gives the total principle amount for calculating compound interest
So interest on interest is compound interest
CI=P[1+R100]TP it is the correct answer

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