ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Answer: Carly will have $1, 433 in her account at the end of 10 years. Lara will have $1, 280 in her account at the end of 10 years.

Detailed explanation-2: -The formula to calculate the amount when principal is compounded annually is given by A=P×(1+R100)n. Q. By using the formula, find the amount and compound interest on: In how many years will Rs 1800 amount to Rs 2178 at 10% per annum when compounded annually ?

Detailed explanation-3: -Interest can be calculated in two ways: simple interest or compound interest. Simple interest is calculated on the principal, or original, amount of a loan. Compound interest is calculated on the principal amount and the accumulated interest of previous periods, and thus can be regarded as “interest on interest.”

Detailed explanation-4: -When an account uses simple interest, the interest rate only applies to the principal balance. But compound interest gets applied to the principal balance and accumulated interest. Over time, an account that uses compound interest can lead to paying (or earning) more interest than one that uses simple interest.