ECONOMICS
COMPOUND INTEREST
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Emily would like to buy some new furniture for her home. She decides to buy the furniture on credit with 9.5% interest compounded quarterly . If she spent $7, 400, how much total will she have paid after 8 years.
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$15, 415.94
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$15, 683.28
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$15, 927.56
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$16, 109.05
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Explanation:
Detailed explanation-1: -When the amount compounds daily, it means that the amount compounds 365 times in a year. i.e., n = 365.
Detailed explanation-2: -Ending Investment = Start Amount * (1 + Interest Rate) ^ n For daily compounding, the interest rate will be divided by 365, and n will be multiplied by 365, assuming 365 days in a year.
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