Shereen has $80 in a savings account. The interest rate is 10%, compounded annually.To the nearest cent, how much interest will she earn in 3 years?Use the formula B = p(1 + r)t, where B is the balance (final amount), p is the principal (starting amount), r is the interest rate expressed as a decimal, and t is the time in years.

COMPOUND INTEREST

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

A	$26.47
B	$26.48
C	$26.50
D	$26.00

Explanation:

Detailed explanation-1: -compounded, annually at the rate of 10% p.a. for 3 years is Rs 331. Q.

Detailed explanation-2: -If you were to gain 10% annual interest on $100, for example, the total amount earned per year would be $10. At the end of the year, you’d have $110: the initial $100, plus $10 of interest.

Detailed explanation-3: -The formula for compound interest is A = P(1 + r/n)^nt where P is the principal balance, r is the interest rate, n is the number of times interest is compounded per year and t is the number of years.

Detailed explanation-4: -How Compound Interest Works. Compound interest is calculated by multiplying the initial principal amount by one plus the annual interest rate raised to the number of compound periods minus one.

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ECONOMICS (CBSE/UGC NET)

ECONOMICS

COMPOUND INTEREST