ECONOMICS
COMPOUND INTEREST
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
|
|
8%
|
|
|
25%
|
|
|
68%
|
|
|
6%
|
Detailed explanation-1: -Katie Kerpel Copyright Investopedia, 2019. The formula for calculating the amount of compound interest is as follows: Compound interest = total amount of principal and interest in future (or future value) minus principal amount at present (or present value)
Detailed explanation-2: -Answer and Explanation: The correct answer is d) $1, 116.14.
Detailed explanation-3: -The future value of $1, 000 one year from now invested at 5% is $1, 050, and the present value of $1, 050 one year from now assuming 5% interest is earned is $1, 000.
Detailed explanation-4: -Here’s the simple interest formula: Interest = P x R x T. P = Principal amount (the beginning balance). R = Interest rate (usually per year, expressed as a decimal). T = Number of time periods (generally one-year time periods).