ECONOMICS
COMPOUND INTEREST
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Ann puts $300 in a bank account earning 4% interest. How much will she earn in interest in 1 year?
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4
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8
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12
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16
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Explanation:
Detailed explanation-1: -Ann puts $300 in a bank account earning 4% interest. In 1 year, she will have earned $32 in interest.
Detailed explanation-2: -To calculate simple interest, multiply the principal amount by the interest rate and the time. The formula written out is “Simple Interest = Principal x Interest Rate x Time.” This equation is the simplest way of calculating interest.
Detailed explanation-3: -Hence, at the end of 3 years, the simple interest is $787.5.
Detailed explanation-4: -How much interest is that? The simple interest formula is I=Prt. The P represents the principal.
There is 1 question to complete.