ECONOMICS
COMPOUND INTEREST
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Katie is trying to decide what bank to put her money in. Bank 1, she can invest $1, 000 with an annual rate of 2.4% compounded interest. Bank 2, she can invest $1, 000 with a rate of 2% simple interest. How much more money would Katie earn in 5 years at Bank 1 than the earnings at Bank 2?
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$25.90
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$108.80
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$23.09
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$91.40
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Explanation:
Detailed explanation-1: -Here’s the simple interest formula: Interest = P x R x T. P = Principal amount (the beginning balance). R = Interest rate (usually per year, expressed as a decimal). T = Number of time periods (generally one-year time periods).
Detailed explanation-2: -∴ the compound interest is Rs. 9, 327
Detailed explanation-3: -25000, t = 2 years, r = 4%, 5% successively. Hence, Amount = Rs. 27300.
There is 1 question to complete.