ECONOMICS
COMPOUND INTEREST
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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divide 12 by the months
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divide the months by 12
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multiply 12 times the months
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change the months to a decimal
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Detailed explanation-1: -In simple interest when the time is given in months and days we always need to convert into years. Notes: (i) When “T’ i.e., the time is given in months then it should be divided by 12 to convert into years. (ii) When “T’ i.e., the time is given in days then it should be divided by 365 to convert into years.
Detailed explanation-2: -Simple interest is calculated with the following formula: S.I. = P × R × T, where P = Principal, R = Rate of Interest in % per annum, and T = Time, usually calculated as the number of years. The rate of interest is in percentage r% and is to be written as r/100.
Detailed explanation-3: -You calculate the simple interest by multiplying the principal amount by the number of periods and the interest rate.
Detailed explanation-4: -Interest formula for simple interest: I = Prt where I is the total amount of interest accrued; over t time periods at a simple interest rate, r, and where the original amount invested or borrowed is P.