ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -"12% interest compounded monthly” means that the interest rate is 12% per year (not 12% per month), compounded monthly. Thus, the interest rate is 1% (12% / 12) per month.

Detailed explanation-2: -Compound interest, can be calculated using the formula FV = P*(1+R/N)^(N*T), where FV is the future value of the loan or investment, P is the initial principal amount, R is the annual interest rate, N represents the number of times interest is compounded per year, and T represents time in years.

Detailed explanation-3: -Compound interest formulas Hence, if a two-year savings account containing $1, 000 pays a 6% interest rate compounded daily, it will grow to $1, 127.49 at the end of two years.

Detailed explanation-4: -For a daily interest rate, divide the annual rate by 360 (or 365, depending on your bank). For a quarterly rate, divide the annual rate by four. For a weekly rate, divide the annual rate by 52. 03-Jun-2022