ECONOMICS
COMPOUND INTEREST
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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A=Pert
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A=(1+(r/n))nt
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Either A or B
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None of the above
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Detailed explanation-1: -P = the principal amount. r = rate of interest. t = time in years. n = number of times the amount is compounding.
Detailed explanation-2: -To calculate daily compound interest, the interest rate will be divided by 365, and the number of years (n) will be multiplied by 365.
Detailed explanation-3: -Compound interest, can be calculated using the formula FV = P*(1+R/N)^(N*T), where FV is the future value of the loan or investment, P is the initial principal amount, R is the annual interest rate, N represents the number of times interest is compounded per year, and T represents time in years.
Detailed explanation-4: -You first take the annual interest rate on your loan and divide it by 365 to determine the amount of interest that accrues on a daily basis. Say you owe $10, 000 on a loan with 5% annual interest. You’d divide that 5% rate by 365: 0.05 ÷ 365 = 0.000137 to arrive at a daily interest rate of 0.000137.
Detailed explanation-5: -We can use the following formula to find the ending value of some investment after a certain amount of time: A = P(1 + r/n)nt where: If the investment is compounded daily, then we can use 365 for n: A = P(1 + r/365)365t More items •26-Jan-2022