ECONOMICS (CBSE/UGC NET)

ECONOMICS

COMPOUND INTEREST

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

How much more money with Ms. Hyde earn on $3, 000 invested at 4% interest compounded annually for 20 years than $3, 000 invested at a simple interest rate of 4% for 20 years?

A	$ 417.34
B	$ 117.39
C	$ 4, 173.37
D	$ 1, 173.37

Explanation:

Detailed explanation-1: -To calculate daily compound interest, the interest rate will be divided by 365, and the number of years (n) will be multiplied by 365.

Detailed explanation-2: -Answer: The answer to this question is Rs 183.624.

Detailed explanation-3: -The Rule of 72 is a calculation that estimates the number of years it takes to double your money at a specified rate of return. If, for example, your account earns 4 percent, divide 72 by 4 to get the number of years it will take for your money to double. In this case, 18 years.

Detailed explanation-4: -Additionally, the Rule of 72 can be applied across all kinds of durations provided the rate of return is compounded annually. If the interest per quarter is 4% (but interest is only compounded annually), then it will take (72 / 4) = 18 quarters or 4.5 years to double the principal.

There is 1 question to complete.