ECONOMICS
COMPOUND INTEREST
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Jerry borrowed $4, 000 for 5 years at 6% simple interest rate . How much did interest did he pay?
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$800
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$1, 000
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$1, 200
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$1, 500
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Explanation:
Detailed explanation-1: -The interest alfred receives is 4000(5×1006)=4000×10030=1200.
Detailed explanation-2: -Answer and Explanation: Alfred will receive the interest amount $ 1, 200 .
Detailed explanation-3: -5% = 0.05 . Then multiply the original amount by the interest rate. $1, 000 * 0.05 = $50 . That’s it.
Detailed explanation-4: -Simple Interest Formula Thus, if simple interest is charged at 5% on a $10, 000 loan that is taken out for three years, then the total amount of interest payable by the borrower is calculated as $10, 000 x 0.05 x 3 = $1, 500.
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