ECONOMICS (CBSE/UGC NET)

ECONOMICS

SAVING AND INVESTING

Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
Battle Ground bank pays 5 percent interest compounded quarterly on regular savings account. Martha Luna deposited $3, 000 for 2 years. She made no other deposits or withdrawals. Using the Compound Interest Calculator, figure out how much interest Martha earned during the 2 years?
A
$1.10449
B
$3, 313.47
C
$3, 313.46
D
$313.47
Explanation: 

Detailed explanation-1: -I=10020000×2×5=Rs. 2, 000. Was this answer helpful?

Detailed explanation-2: -In savings accounts, interest can be compounded, either daily, monthly, or quarterly, and you earn interest on the interest earned up to that point. The more frequently interest is added to your balance, the faster your savings will grow.

Detailed explanation-3: -A compound interest account pays interest on the account’s principal balance and any interest it had previously accrued. Because higher principals net higher returns, and higher returns then add to those principals, growth from compounding becomes progressively stronger with time.

Detailed explanation-4: -Here’s the simple interest formula: Interest = P x R x T. P = Principal amount (the beginning balance). R = Interest rate (usually per year, expressed as a decimal). T = Number of time periods (generally one-year time periods).

There is 1 question to complete.