ECONOMICS (CBSE/UGC NET)

ECONOMICS

COMPOUND INTEREST

Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
You paid $2, 292.45 for the principal and interest on money you borrowed. What was the original amount you borrowed if you borrowed it for 5 1/2 years at an interest of 5.7% compounded annually?
A
$602.45
B
$1690
C
$1, 870.55
D
$3, 982.45
Explanation: 

Detailed explanation-1: -The principal is the amount of money you borrow when you originally take out your home loan. To calculate your mortgage principal, simply subtract your down payment from your home’s final selling price.

Detailed explanation-2: -∴ Simple interest is Rs. 432 on a principal of Rs. 1800 at the rate of 8% per annum for 3 years.

Detailed explanation-3: -Compound interest is calculated on the principal amount and the accumulated interest of previous periods, and thus can be regarded as “interest on interest.”

Detailed explanation-4: -What Is Simple Interest? Simple interest is an interest charge that borrowers pay lenders for a loan. It is calculated using the principal only and does not include compounding interest.

There is 1 question to complete.