Ricco deposits $500 in an account that earns 2.5% interest compounded annually for 3 years. Wally deposits $500 in an account that earns 5.1% interest compounded annually for 2 years. Who will earn the greatest amount of interest?

COMPOUND INTEREST

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

A	Ricco will earn $13.85 more than Wally
B	Wally will earn $13.85 more than Ricco
C	Either A or B
D	None of the above

Explanation:

Detailed explanation-1: -∴ Amount will be Rs. 3025 and Interest will be Rs. 525 If Compounded Annually.

Detailed explanation-2: -If the interest is compounded monthly, n is 12. This is used for interest which is compounded continuously.

Detailed explanation-3: -For example, if you deposit $1, 000 in an account that pays 1 percent annual interest, you’d earn $10 in interest after a year. Thanks to compound interest, in Year Two you’d earn 1 percent on $1, 010-the principal plus the interest, or $10.10 in interest payouts for the year.

Detailed explanation-4: -The formula for compound interest is A=P(1+rn)nt, where A represents the final balance after the interest has been calculated for the time, t, in years, on a principal amount, P, at an annual interest rate, r. To find the balance after two years, A, we need to use the formula, A=P(1+rn)nt. More items •03-Mar-2022

There is 1 question to complete.

ECONOMICS (CBSE/UGC NET)

ECONOMICS

COMPOUND INTEREST