conclusion on simple interest
Answers
Explanation:
Simple interest rate is in nature favorable for the borrower because of a fixed cash outflow. Compound interest is suitable for savings because it has a multiplier effect therefore investments in compound interest rate are normally for longer periods.
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Answer:
Simple interest benefits the borrower, since it will cost less overall to pay off a loan that is not compounded over time. With each payment a borrower makes, the amount left to repay decreases the quicker they pay off the loan — which means less interest to pay back.Simple interest is the total amount paid to the borrower for using the borrowed money for a fixed period. The compound interest earns interest on the previously earned interest and also the principal amount.
Conclusion – simple interest vs compound interest:
Compound interest is suitable for savings because it has a multiplier effect therefore investments in compound interest rate are normally for longer periods. However, in essence whichever type of interest is applied it will end up increasing the wealth of the lender.A borrower can take advantage of the way simple interest auto loans are structured and save money over the course of that loan. This can be accomplished by reducing the loan term, paying more than the monthly amount, and payment splitting.
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