ECONOMICS
COMPOUND INTEREST
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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$287.50
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$11, 777.31
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$11, 787.50
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$2875.00
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Detailed explanation-1: -Simple Interest is calculated using the following formula: SI = P × R × T, where P = Principal, R = Rate of Interest, and T = Time period.
Detailed explanation-2: -Simple Interest Formula Thus, if simple interest is charged at 5% on a $10, 000 loan that is taken out for three years, then the total amount of interest payable by the borrower is calculated as $10, 000 x 0.05 x 3 = $1, 500.
Detailed explanation-3: -In how many years will a sum of money double itself with the rate of 10% per annum simple interest? Here, we have R = 10% and have to calculate t for the sum of the money (that is P) to double. Hence, it will take 10 years for the sum of money to double itself with the rate of 10% per annum simple interest.
Detailed explanation-4: -You can calculate the simple interest you’ll earn in a savings account by multiplying the account balance by the interest rate by the time period the money is in the account. Note that the interest in a savings account is money you earn, not money you pay. Here’s the simple interest formula: Interest = P x R x T.