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Re: The simple interest for 10 yrs is 6000$ . Compound interest [#permalink]
can anyone explain this clearly?
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Re: The simple interest for 10 yrs is 6000$ . Compound interest [#permalink]
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The wording of this question is awful, and you need to guess what it's even asking. We also don't even need half of the information to answer the question. When interest is "simple", that means the interest applies only to the initial investment every time. So if you invest $5000 at 10% simple annual interest, you earn $500 every year (10% of the initial $5000 investment) -- it never changes, and there is no compounding. So in this question, if the investment earns $6000 in simple interest over a 10 year period, it is earning $600 in simple interest each year. That information alone doesn't let you work out the size of the investment or the interest rate (it could be a $1200 investment earning 50% each year, or a $60,000 investment earning 1% each year, among many other possibilities), but if you look at the five answer choices, only answer C correctly gives us $600 of simple interest in one year. So we don't even need to bother with the information about compound interest.
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Re: The simple interest for 10 yrs is 6000$ . Compound interest [#permalink]
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Re: The simple interest for 10 yrs is 6000$ . Compound interest [#permalink]
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