What factors determine the amount of interest earned on a fi

What factors determine the amount of interest earned on a fixed principal? Choose the correct answer below. A. The principal or present value B. The interest rate and the number of compounding periods C. The effective rate D. The number of years

Solution

Interest = Amount - Principal

Interest = p(1+(r/n))^(nt)  - p              // \"r\" is the rate , \"n\" is number of compounding periods, \"t\" number of years

                                                         // \"p\" is the principal

Here interest earned depends upon \"interest rate \" , \"number of compounding periods\" and \"number of years\".

it will not depend on principal as it is fixed.

hence (b) and (d)