ECONOMICS
COMPOUND INTEREST
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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You borrowed $1, 690 for 5 1/2 years at an interest of 5.7% compounded annually. How much extra did you pay by taking out the loan?
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$602.45
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$2, 292.45
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$1, 87.55
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$3, 982.45
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Explanation:
Detailed explanation-1: -On what sum will the compound interest at 5% per annum for 2 years compounded annually be Rs 164? Hence, Principal = Rs. 1600.
Detailed explanation-2: -Hence, the interest earned is Rs 734.5.
Detailed explanation-3: -Calculate Accrued Amount (Future Value FV) using A = P(1 + r/n)^nt. In this example we start with a principal investment of 10, 000 at a rate of 3% compounded quarterly (4 times a year) for 5 years. If you paste this correctly you should see the answer Accrued Amount (FV) = 11, 611.84 in cell B1.
Detailed explanation-4: -15000 at 5% per annum for two years is Rs 1500 and the amount after 2 years is Rs. 16500.
There is 1 question to complete.