ECONOMICS
COMPOUND INTEREST
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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$33.00
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$33.08
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$34.08
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$30.00
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Detailed explanation-1: -Solution: We use the present value formula, where A is $20, 000, r is 6% or 0.06, n is 12, and t is 5 years. Approximately $14, 827.45 should be invested today in order to accumulate to $20, 000 in five years.
Detailed explanation-2: -According to the Rule of 72, it would take about 14.4 years to double your money at 5% per year.
Detailed explanation-3: -Compound interest formulas Hence, if a two-year savings account containing $1, 000 pays a 6% interest rate compounded daily, it will grow to $1, 127.49 at the end of two years.
Detailed explanation-4: -Compound interest, can be calculated using the formula FV = P*(1+R/N)^(N*T), where FV is the future value of the loan or investment, P is the initial principal amount, R is the annual interest rate, N represents the number of times interest is compounded per year, and T represents time in years.