ECONOMICS
COMPOUND INTEREST
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Subtracting the Interest from the Principal
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Multiplying the Interest times the Principal
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Dividing the Interest by the Principal
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Adding the Interest and the Principal
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Detailed explanation-1: -The simple interest formula is given by I = PRt where I = interest, P = principal, R = rate, and t = time. Here, I = 10, 000 * 0.09 * 5 = $4, 500. The total repayment amount is the interest plus the principal, so $4, 500 + $10, 000 = $14, 500 total repayment.
Detailed explanation-2: -To calculate simple interest, multiply the principal amount by the interest rate and the time. The formula written out is “Simple Interest = Principal x Interest Rate x Time.” This equation is the simplest way of calculating interest.
Detailed explanation-3: -Simple interest is based on the original principal amount of a loan or deposit. Compound interest, on the other hand, is based on the principal amount and the interest that accumulates on it in every period.
Detailed explanation-4: -The total amount repaid is called the future value. The original principal, P, is the present value. The future value of a simple interest loan, denoted A, is given by A = P(1 + rt).