Assertion and reason: compounding

Exercise and reference answers

Questions

1. Reason

   From the second year its base has already grown.

   Verdict

   Both are true; the reason explains the assertion.

   Assertion

   Compound interest exceeds simple interest after year one.

2. Reason

   Interest is added to the balance, which then earns interest itself.

   Verdict

   Both are true; the reason explains the assertion.

   Assertion

   The interest in a passbook is not the same each year.

3. Reason

   In year one both are worked out on the original principal.

   Verdict

   Both are true; the reason explains the assertion.

   Assertion

   Compound and simple interest agree in the first year.

Explanation