ECONOMICS
COMPOUND INTEREST
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Anna invested $2, 500 at an annual rate of 5%. How long will it take until Anna earns $1, 125 in interest?
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5 years
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8 years
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10 years
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9 years
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Explanation:
Detailed explanation-1: -Hence, the simple interest on Rs 2500 for 3years at 5%p.a is Rs. 375.
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."
Detailed explanation-3: -A simple interest loan is a non-compounded loan. This means that your interest is calculated off the remaining principal balance of your loan, so that you pay a set monthly amount plus interest. If you can manage to pay more on this set amount, it will lower your payments going forward.
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