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17 Feb 2023, 01:48
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B
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Difficulty:
45%
(medium)
Question Stats:
68% (02:15) correct
32%
(02:25)
wrong
based on 449
sessions
History
Date
Time
Result
Not Attempted Yet
Vlad invests $4,000 at a 5% annual interest rate compounded semi-annually. Pavel invests $4,000 at a 5% annual simple interest rate. How much interest does Vlad earn than Pavel after one year ?
A. $0
B. $2.5
C. $5
D. $205
E. $210
A. $0
B. $2.5
C. $5
D. $205
E. $210
18 Feb 2023, 08:36
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Formula for compound interest: principal*(1+interest rate/interest applications per period)^number of interest applications
Formula for simple interest: principal*interest rate*periods
->
Vlad: 4000*(1+0.05/2)^2 = 4202.5
Pavel: 4000*0,05*1 = 4200
Difference = 2.5
Formula for simple interest: principal*interest rate*periods
->
Vlad: 4000*(1+0.05/2)^2 = 4202.5
Pavel: 4000*0,05*1 = 4200
Difference = 2.5
02 May 2023, 07:49
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Bunuel
Calculation of CI
1st Half Year , CI = 4000*5*1/200 => 100, So, Amount is 4100
2nd Half Year , CI = 4100*5*1/200 => 102.50, So, Amount is 4202.50
Calculation of SI
Amount is 4000 + 4000*5*1/100 = 4200
Thus, difference in CI and SI is 4202.50 - 4200 = 2.50, Answer must be (B) 2.50
