ECONOMICS
COMPOUND INTEREST
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
|
|
Bernard says the 2-year term will save her $770.16 in interest.
|
|
|
Bonnie says the 5-year term will save her $770.16 in interest.
|
|
|
Either A or B
|
|
|
None of the above
|
Detailed explanation-1: -Generally, simple interest paid or received over a certain period is a fixed percentage of the principal amount that was borrowed or lent. Compound interest accrues and is added to the accumulated interest of previous periods, so borrowers must pay interest on interest as well as principal.
Detailed explanation-2: -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-3: -Given: SI = 100. r = 10% t = 6 month = 6/12 year. Concept used: SI = Prt/100. P → princiapl r → rate of interest. Calculation: 100 = (P × 10 × 6)/(12 × 100) P = (100 × 100 × 12)/(10 × 6) P = 2000. Download Soln PDF. Share on Whatsapp.