ECONOMICS
COMPOUND INTEREST
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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n = 1
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n = 52
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n = 12
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n = 365
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Detailed explanation-1: -When the amount compounds daily, it means that the amount compounds 365 times in a year. i.e., n = 365.
Detailed explanation-2: -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-3: -n represents the number of times the amount is compounding. When calculate compounds interest on daily basis which means that the amount compounds 365 times in a year. i.e., n = 365.
Detailed explanation-4: -On the other hand, Exact simple interest is a simple interest that uses exact number of days in a year which is 365 (or 366 for leap year). These two kinds of simple interest are only applicable if the unit of time used is in days.