ECONOMICS
COMPOUND INTEREST
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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$2187.50
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$7000
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6.25%
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$9187.50
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Detailed explanation-1: -For example, let’s say you take out a $10, 000 loan at 5% annual simple interest to repay over five years. You want to know your total interest payment for the entire loan. To start, you’d multiply your principal by your annual interest rate, or $10, 000 × 0.05 = $500.
Detailed explanation-2: -The simple interest of a loan for $1, 000 with 5 percent interest after 3 years is $ 150.
Detailed explanation-3: -You can calculate your total interest by using this formula: Principal loan amount x interest rate x loan term = interest.
Detailed explanation-4: -Divide the amount of the additional payment by the amount loaned to determine the simple interest rate. For example, consider a loan of $1, 000, which must be repaid in one year with the amount of $1, 300. This is $300/$1, 000, or 30 percent per year, which is a hefty interest rate.