When
you borrow money from a bank, you pay interest. Interest a fee charged for
borrowing the money, it is a percentage charged on the principle amount for a
period of a year - usually.
If you want to know how much interest
you will earn on your investment or if you want to know how much you will pay
above the cost of the principal amount on a loan or mortgage, you will need to
understand how compound interest works (See video).
Compound interest is paid on the original principal and on the accumulated past interest.
Practice doing the activity here.
Take care.
ALICIA
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