Financial Math Class 251

Mathematics
Tutor: None Selected Time limit: 1 Day

In return for 100,000 at time 0, an investor receives x at time 5 and 2x at time 15. Interest is calculated at a simple interest rate of 10%. Determine the value of x using a determination date of t*=10%.

Sep 14th, 2015

Thank you for the opportunity to help you with your question!

simple interest (SI)= Prt/100

where P = 100000 , r = 10% and time 5 years then  Amount received, x =P + SI

substituting values we get , SI = 100000*10*5/100 = 50000

hence x = 100000+50000 = 150000 Answer

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simple interest (SI)= Prt/100

where P = 100000 , r = 10% and time 15 years then  Amount received, 2x =P + SI

substituting values we get , SI = 100000*10*15/100 = 150000

hence 2x = 100000+150000 = 250000 Answer

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Sep 14th, 2015

If everything stays the same but it goes from simple interest to effective simple interest. How would that change the answer?

Sep 14th, 2015

i could not understood your problem !


Sep 14th, 2015

Sorry! The next part of the question keeps all the information the same it just says the interest is calculated at a simple effective interest rate of 10% instead of just simple interest rate. The word effective is the only difference

.

Sep 14th, 2015

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