The method of calculating interest once during the entire life of the loan,on the original sum borrowed,is known as:
A)simple interest
B)interest on interest
C)compounding
D)rule of 72
E)compound interest

Question

Quizplus · Accepted Answer

The method described in the question is known as simple interest. Option B refers to when interest is applied on top of already accumulated interest, which is not the case here. Option C refers to the process of calculating interest on the initial sum as well as any accumulated interest, which is not what is being described in the question. Option D refers to a formula for calculating the time it takes for investment to double, and option E refers to the process of calculating interest on both the initial sum and any accumulated interest.

The Method of Calculating Interest Once During the Entire Life