ECONOMICS
COMPOUND INTEREST
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Rico 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?
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Rico will earn $13.85 more than Wally
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Wally will earn $13.85 more than Rico
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Rico and Wally will earn the same amount of interest.
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None of the above
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Explanation:
Detailed explanation-1: -(1+12100)3=25000(2825×2825×2825)=35123.20. Q. What will be the compound interest on a sum of Rs. 25, 000 after 3 years at the rate of 12 p.c.p.a.?
Detailed explanation-2: -734.5 is the compound interest on Rs. 6500 for 2 years.
Detailed explanation-3: -∴ Amount will be Rs. 3025 and Interest will be Rs. 525 If Compounded Annually.
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
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