# ECONOMICS (CBSE/UGC NET)

## ECONOMICS

### COMPOUND INTEREST

 Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
Laura opens a savings account and deposits \$3, 000. The interest is compounded annually at 3%. How much interest will she earn after 5 years?
 A 3, 500.88 B 500.50 C 4598.90 D 477.82
Explanation:

Detailed explanation-1: -To use the rule, divide 72 by the investment return (the interest rate your money will earn). The answer will tell you the number of years it will take to double your money. For example: If your money is in a savings account earning 3% a year, it will take 24 years to double your money (72 / 3 = 24).

Detailed explanation-2: -It is calculated by multiplying the first principal amount by one and adding the annual interest rate raised to the number of compound periods subtract one. The total initial amount of your loan is then subtracted from the resulting value. P is principal, I is the interest rate, n is the number of compounding periods.

Detailed explanation-3: -3000 will become Rs. 3993 in 3 years (compound interest). A=P(1+r100)n Where A=Rs.

Detailed explanation-4: -Using the rule of 72, you would estimate that an investment with a 5% compound interest rate would double in 14 years (72/5).

There is 1 question to complete.