ECONOMICS
COMPOUND INTEREST
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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it must be in months
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it must be in years
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it is not calculated
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None of the above
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Detailed explanation-1: -The simple interest formula is given by I = PRt where I = interest, P = principal, R = rate, and t = time. Here, I = 10, 000 * 0.09 * 5 = $4, 500. The total repayment amount is the interest plus the principal, so $4, 500 + $10, 000 = $14, 500 total repayment.
Detailed explanation-2: -It is governed by the formula: I = Prt. where I is the amount of interest, P is the principal (amount of money borrowed), r is the interest rate (per year), and t is the time (expressed in years).
Detailed explanation-3: -In the simple-interest formula I = Prt, the variable I stands for the interest on the original investment, P stands for the amount of the original investment (called the “principal"), r is the interest rate (expressed in decimal form), and t is the time. For annual interest, the time t must be in years.
Detailed explanation-4: -Calculate Interest, solve for I. I = Prt. Calculate Principal Amount, solve for P. P = I / rt. Calculate rate of interest in decimal, solve for r. r = I / Pt. Calculate rate of interest in percent. R = r * 100. Calculate time, solve for t. t = I / Pr.