Question

Which of the following statements is true? (Rate of interest = R% per annum)

• A. In simple interest the principal changes every year.
• B. In compound interest the principal is fixed every year.
• C. In compound interest the principal changes every year.
• D. Both compound interest and simple always have the same principal every year.

Answer 1

The correct option is C

In compound interest the principal changes every year.

In simple interest the principal doesn’t change yearly while in compound interest it does change yearly.