ECONOMICS
COMPOUND INTEREST
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Daniel invests $360 in a bank account that is compounded annually with an interest rate of 5.5%. What will be the total amount in the account after 8 years?
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$625.88
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$950.12
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$315.45
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$552.49
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Explanation:
Detailed explanation-1: -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-2: -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.
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