BUSINESS ADMINISTRATION
BUSINESS MATHEMATICS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Tell whether the given situation shows SIMPLE or COMPOUND interest.Nathan deposits Php 55, 000.00 in a bank. The bank paid him an interest of 3% (or P1, 650.00) annually. After a year, he got back an amount of Php 56, 650.
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Simple
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Compound
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Explanation:
Detailed explanation-1: -Banks use compound interest for some loans. But compound interest is most commonly used in investments. Also, compound interest is used by fixed deposits, mutual funds, and any other investment that has reinvestment of profits.
Detailed explanation-2: -Example 1:If the difference between Simple Interest and Compound Interest on a certain sum of money in 2 years at 20 % p.a. is Rs. 800, then find the sum. (100/r)2 P = 800 X 10000/20*20 → P = 20000. Hence the sum is Rs.
Detailed explanation-3: -Detailed Solution. ∴ The compound interest for the given principal is Rs. 5, 250.
There is 1 question to complete.