ECONOMICS
COMPOUND INTEREST
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
Emilio borrows $1200 from a bank with an interest rate of 8% per year compounded annually for 2 years. How much interest did he have to pay back after the 2 years?
|
|
$199.68
|
|
|
$172
|
|
|
$1372
|
|
|
$1399.68
|
Explanation:
Detailed explanation-1: -Therefore, it will take 50 years to get the double amount at a simple interest rate 2 % per annum.
Detailed explanation-2: -Interest formula for simple interest: I = Prt where I is the total amount of interest accrued; over t time periods at a simple interest rate, r, and where the original amount invested or borrowed is P.
Detailed explanation-3: -I = Prt. where I is the amount of interest, P is the principal (amount of money borrowed), r is the interest rate (per year), and t is the time (expressed in years). The formula can also be expressed as: A = P + I = P(1 + rt)
Detailed explanation-4: -How much interest is that? The simple interest formula is I=Prt. The P represents the principal.
There is 1 question to complete.