ECONOMICS (CBSE/UGC NET)

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ECONOMICS

MONEY

Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
Erin borrowed $18, 000 to buy a car. Her loan will be paid off in 5 years. By the time that she pays off the loan, she will have made $20, 327 in payments. Why did she have to pay $2, 327 more than the price of the car?
A
She had to pay interest of $2, 327 for the privilege of borrowing the principal of $18, 000.
B
She had to pay principal of $2, 327 for the privilege of borrowing the mortgage of $18, 000.
C
She had to pay a default of $2, 327 for the privilege of borrowing the principal of $18, 000.
D
She had to pay interest of $2, 327 for the privilege of borrowing the creditor of $18, 000.
Explanation: 

Detailed explanation-1: -The formula to calculate simple interest is: principal x rate x time = interest (with time being the number of days borrowed divided by the number of days in a year). If you borrow a $2, 500.00 loan with an interest rate of 5.00% for a period of one year, the interest you owe will be $125.00 ($2, 500.00 x .

Detailed explanation-2: -Total amount = Rs 88, 000 + Rs 4, 400 = Rs 92, 400.

Detailed explanation-3: -Do you know the Rule of 72? It’s an easy way to calculate just how long it’s going to take for your money to double. Just take the number 72 and divide it by the interest rate you hope to earn. That number gives you the approximate number of years it will take for your investment to double.

Detailed explanation-4: -40, 000 at 9% per annum is Rs. 7524.

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