Question

determine whether the following statement is true or false. if the statement is false, make the necessary change(s) to produce a true statement. formulas for compound interest show that if you make the decision to postpone certain purchases and save the money instead, small amounts of money can be turned into substantial sums over a period of years. choose the correct answer below. a. the statement is true because simple interest is interest computed on the original principal as well as on any accumulated interest. b. the statement is true because compound interest is interest computed on the original principal as well as on any accumulated interest. c. the statement is false. the true statement is \formulas for compound interest show that if you make the decision to postpone certain purchases and save the money instead, small amounts of money cannot be turned into substantial sums over a period of years.\ d. the statement is false. the true statement is \formulas for simple interest show that if you make the decision to postpone certain purchases and save the money instead, small amounts of money can be turned into substantial sums over a period of years.\

Explanation:

To determine the answer, we analyze the concept of compound interest. Compound interest is calculated on the principal and accumulated interest, allowing savings to grow over time (small amounts to become substantial). Option A is wrong as simple interest is only on principal. Option C contradicts the nature of compound interest. Option D is wrong as simple interest grows slower. Option B correctly explains compound interest and the statement's truth.

Answer:

B. The statement is true because compound interest is interest computed on the original principal as well as on any accumulated interest.