ECONOMICS
COMPOUND INTEREST
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
|
|
18 months
|
|
|
2 years
|
|
|
16 years
|
|
|
3 years
|
Detailed explanation-1: -Simply divide your APY by 12 (for each month of the year) to find the percent interest your account earns per month. For example: A 12% APY would give you a 1% monthly interest rate (12 divided by 12 is 1). A 1% APY would give you a 0.083% monthly interest rate (1 divided by 12 is 0.083).
Detailed explanation-2: -By definition, a bank that pays simple interest on a savings account will pay interest: only on the initial investment. Compound interest is defined as the interest earned: on both the initial principal and all interest earned and reinvested in prior periods.
Detailed explanation-3: -Interest on savings account= Daily balance*Rate of interest* (No. of days/365) Interest= Principal*Rate of interest. Interest: 100, 000*8%= 8000. Total Maturity value: 100, 000+8000= Rs. 1, 08, 000. Interest (6 months): 100, 000*5.5%= 5500. Pre-Maturity Value (6 months): Rs. 1, 05, 500.