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Given below are two statements Statement I: Compound interest involves the reinvestment of the earned interest, which in future years also earns interest Statement II:  Simple interest is the amount earned or paid on a sum of compound interest and principal amount In light of the above statement, choose the most appropriate answer from the option given below

Given below are two statements Statement I: Compound interest involves the reinvestment of the earned interest, which in future years also earns interest Statement II:  Simple interest is the amount earned or paid on a sum of compound interest and principal amount In light of the above statement, choose the most appropriate answer from the option given below Correct Answer Statement I is correct but statement II is false

Concept used:

In the case of the compound interest, Interest is earned on the interest every year.

And, In case of simple interest, Interest is only earned on the principal only and interest is the same in every year.

Calculation:

From the above statement we come to know that Statement I is correct and Statement II is wrong

∴ The correct answer is option 3

Related Questions

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