Henry deposits $750 into a college savings account that is compounded annually. If Henry leaves the money in the account without adding or removing any and receives a 8.5% interest rate, how much money will he have total after 5 years?

COMPOUND INTEREST

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Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]

A	$1127.74
B	$1535.24
C	$2345.67
D	$850.76

Explanation:

Detailed explanation-1: -According to the Rule of 72, it would take about 14.4 years to double your money at 5% per year.

Detailed explanation-2: -Compound interest is calculated by multiplying the initial loan amount, or principal, by the one plus the annual interest rate raised to the number of compound periods minus one. This will leave you with the total sum of the loan including compound interest.

Detailed explanation-3: -What is the answer? Higher rates are always better. Compounding more often is always better. So, 12% compounded annually is worse than 15% compounded annually is worse than 15% compounded monthly.

Detailed explanation-4: -1/1: Interest rates are always expressed as a percentage over an annual time period. 1/2:When interest is compounded annually, the amount of money accumulated in one year is the same under either a simple or compound interest scenario.

There is 1 question to complete.

ECONOMICS (CBSE/UGC NET)

ECONOMICS

COMPOUND INTEREST