ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Answer and Explanation: It is better to have a compound interest that pays 5% interest compounded daily. This is because even though the two accounts have the same rate of interest, the frequency of the 5% interest compounded daily account is higher.

Detailed explanation-2: -’Find the total amount of interest to the nearest cent if the interest $ comi unded annually. $2750at 8% for 2 years P-S2750 0.08 years Total interest =Accrued Amount $ $2750 =$ 457.60’

Detailed explanation-3: -By definition, a bank that pays simple interest on a savings account will pay interest: only on the initial investment. Compound interest is defined as the interest earned: on both the initial principal and all interest earned and reinvested in prior periods.

Detailed explanation-4: -Compound interest can help grow your funds year over year through accumulative interest. For example, if you earn 5% yearly interest on $1, 000, you’ll earn just over $276 over the course of five years. Just imagine: If you invest an extra $1, 000 per year, for 50 years, you could save as much as $220, 000.