ECONOMICS
COMPOUND INTEREST
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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If you want to find the amount of compound interest an account has earned, what is the next step after finding “A” using the formula A=P(1+r)t?
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Add A (total amount) plus P (original amount)
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Subtract A (total amount from P (original amount)
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Add P (original amount) plus A (total amount)
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Subtract P (original amount) from A (total amount)
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Explanation:
Detailed explanation-1: -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-2: -The formula for calculation of compound interest when the amount and the principal are known is C. I. =A−P. Was this answer helpful?
Detailed explanation-3: -First, start with the simple interest formula ( I = P R T ) . Write down what you know. Next, fill in what you know into the simple interest formula and solve for . Then, add this interest to your original investment.
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