ECONOMICS
COMPOUND INTEREST
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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You put $3000 into a life insurance policy that pays 7.5% simple annual interest. If you do not invest any more money into the policy, how much accumulated interest should you expect to have at the end of 20 years?
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$45, 000
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$4500.00
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$450.00
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$45.00
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Explanation:
Detailed explanation-1: -Answer: The answer to this question is Rs 183.624.
Detailed explanation-2: -I. =A−P=Rs6, 945. 75=Rs6, 000=Rs945.
Detailed explanation-3: -The formula is: Time = 72/r, where r is the rate of interest. The rule of 72 says that it will take about 12 years for an investment to double. The Rule of 72 applies to compounded interest rates and is reasonably accurate for interest rates between 6% and 10%.
Detailed explanation-4: -Simple Interest Formula Thus, if simple interest is charged at 5% on a $10, 000 loan that is taken out for three years, then the total amount of interest payable by the borrower is calculated as $10, 000 x 0.05 x 3 = $1, 500.
There is 1 question to complete.