ECONOMICS
COMPOUND INTEREST
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Determine the interest when depositing $225 into a savings account at a rate of 5% per year for 3 years.
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33.75
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25.78
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258.75
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3375
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Explanation:
Detailed explanation-1: -Simply divide your APY by 12 (for each month of the year) to find the percent interest your account earns per month. For example: A 12% APY would give you a 1% monthly interest rate (12 divided by 12 is 1). A 1% APY would give you a 0.083% monthly interest rate (1 divided by 12 is 0.083).
Detailed explanation-2: -Here’s the simple interest formula: Interest = P x R x T. P = Principal amount (the beginning balance). R = Interest rate (usually per year, expressed as a decimal). T = Number of time periods (generally one-year time periods).
Detailed explanation-3: -SI = Simple Interest. P = Principal amount (invested or borrowed) R = Rate of interest. T = Time period (investment or loan repayment)
There is 1 question to complete.