ECONOMICS
COMPOUND INTEREST
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Jim will earn $13, 125 more in interest.
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Bill will earn $22, 323.67 more in interest.
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Jim will earn $35, 448.67 more in interest.
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Bill will earn $7, 323.67 more in interest.
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Detailed explanation-1: -Jim and Bill each invest $15, 000 into savings accounts that earn 3.5% interest. Jim’s account earns simple interest and Bill’s account earns compound interest. After 25 years, who will earn more interest and how much more will he earn? Jim will earn $13, 125 more in interest.
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: -compounded, annually at the rate of 10% p.a. for 3 years is Rs 331. Q.
Detailed explanation-4: -488.86. Hence, Compound interest would be Rs. 488.86.
Detailed explanation-5: -The monthly compound interest formula is used to find the compound interest per month. The formula of monthly compound interest is: CI = P(1 + (r/12) )12t-P where, P is the principal amount, r is the interest rate in decimal form, and t is the time.