a. Ingrid took a $20,000 loan for a photo business at 18% simple interest, which resulted in a future value of $22,500. How many days was the loan held? Assume a year is 365.25 days. b. Ingrid also needs $5,000 to purchase camera equipment. She invests $4,000 of her own cash into an account paying 5% interest compounded annually. How many years will be required to earn the $1,000 in interest that she needs?
The formula for annual compound interest is A = P (1 + r/n) ^ nt:
A = the future value of the investment/loan, including interest P = the principal investment amount (the initial deposit or loan amount) r = the annual interest rate (decimal) n = the number of times that interest is compounded per year t = the number of years the money is invested or borrowed for