Question

After one year of payments, how much has been paid to interest? a. $1,100.42 b. $1,010.16 c. $1,188.34 d. $1,241.18

Answer 1

Answer:

Correct answer is A. $1,100.42

Explanation:

Answer 2

The interest paid in one year using the assumed values are: $500 in simple interest and $508.4 in compound interest

How to calculate interest

Simple interest is calculated using:

$I = PRT$

Where:

• P represents the Principal
• R represents the rate
• T represents the time

Assume the above parameters are:

P= = $10000, R = 5%, T = 1

The equation becomes

$I = 10000 * 5\% * 1$

$I = 500$

So the interest after 1 year of payments is $500

If the interest is a compound interest, then we have:

$I = P(1 + r/n)^{nt} - P$

Where:

n represents the number of times the interest is compounded.

Assume n is 3.

So, we have:

$I = 10000(1 + 5\%/3)^{3 * 1}- 10000$

$I = 508.4$

Hence, the interest paid in one year using the assumed values are: $500 in simple interest and $508.4 in compound interest

Read more about simple and compound interest at:

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