Assertion and reason: compounding

Exercise and reference answers

Questions

1. Reason

   Its base grows each year, so each year earns more than the last.

   Verdict

   Both are true; the reason explains the assertion.

   Assertion

   Compound interest is worth more to a saver over a long term.

2. Reason

   In year one both are applied to the same original principal.

   Verdict

   Both are true; the reason explains the assertion.

   Assertion

   The two kinds of interest agree in the first year only.

3. Reason

   Amount equals principal plus interest.

   Verdict

   The assertion is false and the reason is true.

   Assertion

   Compound interest uses a fixed base.

Explanation