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Difference between "simple" and "compound" interest

What is the difference between "simple" and "compound" interest? What are some of the uses of compound interest in business?

How is a home mortgage an example of TVM?

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Simple interest is interest on the principle amount while compound interest is when interest is charged on the principle and any earned interest. The interest rate is applied to the original principle and any accumulated interest.

Time value of money always use compound interest. Thus ...

Solution Summary

This discusses the difference between "simple" and "compound" interest and home mortgage as an example of TVM

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