What happens to the amount of compound interest when the principal amount increases?*Compound interest becomes negativeCompound interest increasesCompound interest decreasesCompound interest remains the same
Question
What happens to the amount of compound interest when the principal amount increases?*Compound interest becomes negativeCompound interest increasesCompound interest decreasesCompound interest remains the same
Solution
When the principal amount increases, the amount of compound interest also increases. This is because compound interest is calculated on the initial principal and the accumulated interest of previous periods of a deposit or loan. So, the larger the principal amount, the more interest will be accumulated.
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