ECONOMICS
COMPOUND INTEREST
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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$1822.95
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$1831.49
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$1824.67
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$18.26.75
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Detailed explanation-1: -How to Calculate Compound Interest? P is principal, I is interest rate, n is number of compounding periods. An investment of Rs 1, 00, 000 for 5 years at 12% rate of return compounded annually is worth Rs 1, 76, 234.
Detailed explanation-2: -For this reason, lenders often like to present interest rates compounded monthly instead of annually. For example, a 6% mortgage interest rate amounts to a monthly 0.5% interest rate. However, after compounding monthly, interest totals 6.17% compounded annually.
Detailed explanation-3: -10000 (1+10100)3=Rs. 10000×1110×1110×1110=Rs. 13310C.I.
Detailed explanation-4: -"12% interest compounded monthly” means that the interest rate is 12% per year (not 12% per month), compounded monthly. Thus, the interest rate is 1% (12% / 12) per month.