ECONOMICS
COMPOUND INTEREST
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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$15, 415.94 LeBron James
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$15, 683.28 Chase Utley
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$15, 927.56 Serena Williams
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$16, 349.72 Tom Brady
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Detailed explanation-1: -Cq = P [ (1+r)4*n – 1 ] The quarterly compounding formula is taken from the compounding formula. The only difference is that the rate of interest is raised 4*2 to reflect the quarterly computation of the 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: -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.