ECONOMICS
COMPOUND INTEREST
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
|
|
$3, 500(0.025)(7)
|
|
|
$3, 500(0.025)7
|
|
|
$3, 500(1.025)7
|
|
|
$3, 500+$3, 500(1.025)7
|
Detailed explanation-1: -Do you know the Rule of 72? It’s an easy way to calculate just how long it’s going to take for your money to double. Just take the number 72 and divide it by the interest rate you hope to earn. That number gives you the approximate number of years it will take for your investment to double.
Detailed explanation-2: -Thus, Liam’s deposit of $3, 500 in the saving account that pays 0.8% quarterly interest will amount to $3, 613.35 at the end of the first year.
Detailed explanation-3: -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.
Detailed explanation-4: -Answer: The total amount at the end of the 2 years is Rs. 5, 737.62.