What is meant by the term compound interest? Give an example based on $1000 and a 10 percent interest rate over a two-year period
What will be an ideal response?
Compound interest means that interest will be earned both on the principal amount deposited in an interest-bearing account and also that interest will be earned on the interest payments made on that principal. For example, assume that in year 1 $1000 is deposited into an account that earns 10 percent interest. At the end of the first year, the account has a value of $1,100, the $1000 in principal plus $100 in interest. After year 2, the account will earn interest both on the $1000 originally deposited ( $100 in interest for Year 2) plus the account will earn interest on the $100 of interest from Year 1 (or $10). At the end of two years, the account is worth $1,210 in value.
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Use the above table. If firms 3 and 4 merge, the four-firm concentration ratio will
A) increase from 75 percent to 80 percent. B) increase from 60 percent to 75 percent. C) decrease from 75 percent to 60 percent. D) not change.
The total cost of purchasing a car is:
a. the dollar amount paid for it. b. the dollar amount paid for it plus the seller's opportunity cost. c. the dollar amount paid for it plus the buyer's opportunity cost of time spent on buying it. d. the dollar amount paid for it plus the seller's opportunity cost of the time spent on looking for a buyer.
Which economic organization would have the BIGGEST role in this part of the world?
a) opec b) nafta c) asean d) united nations
Suppose interest of 5% for two years can be earned on $1,000 saved today with no risk. What is the least amount a person would need to have a 50% chance of winning to be willing to face a 50% chance of losing $1,000 today and be considered risk averse?
a. $907.03 to be paid in two years b. $1,000.01 to be paid in two years c. $1,100.01 to be paid in two years d. $1,102.51 to be paid in two years