Comparing the two

Exercise and reference answers

Questions

1. Question

   In year one, compound interest compared with simple is

   Choices

   1. larger
   2. smaller
   3. equal

   Correct choice

   equal

2. Question

   In year two, compound interest is

   Choices

   1. larger
   2. equal
   3. smaller

   Correct choice

   larger

3. Question

   Compound interest is worked out on

   Choices

   1. the original principal
   2. the previous year's amount
   3. the rate alone

   Correct choice

   the previous year's amount

4. Question

   A = P + I means the amount is

   Choices

   1. principal minus interest
   2. principal times interest
   3. principal plus interest

   Correct choice

   principal plus interest

Explanation