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3 years ago

How is a compound interest different from simple interest?

Business

1 answer:

leonid [27]3 years ago

6 0

Answer:

Simple interest is when interest is paid on the principal amount only. Compound interest is when interest is paid on the principal amount and on the interest already earned.

Explanation:

Simple interest refers to money earned from the principal amount only. Because the principal amount and interest rate remain fixed over time, simple interest earned is a constant figure throughout. The calculation of simple interest is by multiplying the interest rate by the principal amount and the duration.

In compound interest, interest earned is added to the principal amount at the end of a period. The principle increases at the beginning of a period, which means a higher interest is earned. It means the interest earned also earns interests. The interest earned is higher every period.

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A constant-cost industry

Vika [28.1K]

Answer:

C) has a horizontal long-run supply curve.

4 0

3 years ago

When Tesla receives a $1,000 reservation payment from a customer, what Tesla general ledger accounts does this $1,000 impact? Ex

Greeley [361]

<u>Solution and Explanation:</u>

• The Significant dangers and awards of responsibility for products have been moved to the purchaser.

• The dealer holds neither proceeding with the administrative contribution to the degree generally connected with the possession nor powerful authority over the products sold.

• The measure of the income can be dependably estimated.

• It is plausible that the monetary advantages related to the exchange will stream to the vender.

• The cost brought about or to be acquired in regard to the exchange can be estimated dependably. In such conditions, any thought previously got for the offer of merchandise is perceived as an obligation. So therefore, receipt of $1000 received by Tesla as a reservation payment from a customer is recorded as short term liability in its books.

Entry shall be as follows:-

Bank/Cash A/c Dr. $1000

To Advances from Customers $1000

7 0

3 years ago

Find the future values of these ordinary annuities. Compounding occurs once a year. Do not round intermediate calculations. Roun

neonofarm [45]

Answer:

(a) $50,980.35

(b) $5,129.90

(d) $50,980.35

(e) $5,129.90

(f) $2,400

Explanation:

A constant payment for a specified period is called annuity. The future value of the annuity can be calculated using a required rate of return.

Formula for Future value of annuity is

F = P * ([1 + I]^N - 1 )/I

P =Payment amount

I = interest rate

N = Number of periods

(a) $1,000 per year for 16 years at 14%

F = $1,000 x ([1 + 14%]^16 - 1 )/14%

F = $50,980.35

(b) $500 per year for 8 years at 7%

F = $500 x ([1 + 7%]^8 - 1 )/7%

F = $5,129.90

F = $600 x 4

F = $2,400

(d) $1,000 per year for 16 years at 14%

F = $1,000 x ([1 + 14%]^16 - 1 )/14%

F = $50,980.35

(e) $500 per year for 8 years at 7%

F = $500 x ([1 + 7%]^8 - 1 )/7%

F = $5,129.90

(f) $600 per year for 4 years at 0%.

F = $600 x 4

F = $2,400

3 0

3 years ago

Banks channel money from savers to borrowers to _____. investors scarce resources the government

cluponka [151]

Answer:

Investors

Explanation:

Investor is the term which is defined as the person or an individual who allocated the capital or the fund with the expectation for gaining an advantage or the financial return in future.

The investor is someone who provides the business with the capital or funds and someone who bought the stock. Under this situation, the banks are those who channels the money from the savers to borrowers to the investors.

8 0

3 years ago

3)You have won a contest and are allowed to choose between two prizes. One option is to receive$200 today and another $200 one y

vekshin1

Answer:

C)25 percent

Explanation:

Present value is the sum of discounted cash flows.

The interest rate where the present value of the two two prizes would be identical can be found using a financial calculator and trial and error method.

Option A :

Cash flow for year zero = $200

Cash flow for year one = $200

Present value when I is 0 = $400

Present value when I is 5 = $390.48

Present value when I is 10 = $381.82

Present value when I is 25 = $360

Option B

Cash flow in year 0 =$100

Cash flow in year 1 = $325

Present value when I is 0 = $425

Present value when I is 5 = $409.52

Present value when I is 25 = $360

Present value when I is 10 = $395.45

It can be seen that it's at 25% that both cash flows would be equal.

To find the PV using a financial calacutor:

1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.

2. After inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.

3. Press compute

I hope my answer helps you

8 0

3 years ago