ECONOMICS
COMPOUND INTEREST
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]


$30


$38.12


$80


$88.12

Detailed explanation1: Examples: “12% interest” means that the interest rate is 12% per year, compounded annually. “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 explanation2: A 10% interest rate will double your investment in about 7 years (72 ∕ 10 = 7.2); an amount invested at a 12% interest rate will double in about 6 years (72 ∕ 12 = 6). Using the Rule of 72, you can easily determine how long it will take to double your money.
Detailed explanation3: 1) What is the amount of money that you’d have if you invested $50 at an interest rate of 6% compounded monthly after a period of 3 years? 06112.3 A=50 (1+06) 12 $59.84 Page 8 Ex.
Detailed explanation4: Answer and Explanation: The correct answer is c) 12.55%.