ECONOMICS
COMPOUND INTEREST
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Taylor’s parents put $5, 000 into a college savings account that pays 5% simple interest. How many years will it take for the account to grow to $8, 500?
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3 years
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13 years
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14 years
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34 years
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Explanation:
Detailed explanation-1: -Expert-Verified Answer FV= 12000, r = 0.09, n = 12, and t = 6.
Detailed explanation-2: -Understanding the Time Value of Money (TVM) For example, money deposited into a savings account earns interest. Over time, the interest is added to the principal, earning more interest. That’s the power of compounding interest. If it is not invested, the value of the money erodes over time.
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