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Serq93

Mathematics

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8 problems of math under the subject of "compound interest". please solve the problems and use the right furmela

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Compound interest 1. How many days will it take for $1500 to earn $25 interest If it is deposited in a bank paying simple interest at the Rate of 5%/year? (Use a 365-dayyear.) 2. Find the accumulated Amount A if the principal P Is invested at the interest rate of r/year for t years. a. p = $1000, r = 5½%, t = 6, compounded annually. b. p = $180,000, r = 6%, t = 6¼, compounded monthly. 3. Find the effective rate corresponding to the given Nominal rate. 5%/year compounded quarterly. 4. An individual purchase a 4-year $10,000 promissory Note with an interest rate of 5.5%/year compounded semiannually. How much did the note cost? 5. If Jackson deposits $100 at the end of each month in a saving account earning interest at the rate of 3%/year compounded monthly, how much will he have on deposit in his saving account at the end of 6 years, assuming that he makes no withdrawals during that period? 6. Robin, who is self-employed, contributes $5000/year into a Keogh account. How much will he have in the account after 25 years if the account earns interest at the rate of 4.5%/year compounded yearly? 7. The Betzes have leased an auto for 2 years at $450/month. If money is worth 3.5%/year compounded monthly, what is the equivalent cash payment (present value) of this annuity. 8. Mike’s sporting Goods sells elliptical trainers under two payment plans: cash or installment. Under the installment plan, the costumers pays $22/month over 3 years with interest charged on the balance at a rate of 9%/year compounded monthly. Find the cash price for an elliptical trainer if its equivalent to the Price paid by a customer using the installment plan.
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Explanation & Answer

Here is my answer :)

Compound interest
1. How many days will it take for $1500 to earn $25 interest
If it is deposited in a bank paying simple interest at the
Rate of 5%/year? (Use a 365-dayyear.)
𝐼 = 𝑃𝑟𝑡

𝑥
)
365𝑑𝑎𝑦𝑠
$25 ∗ 365 𝑑𝑎𝑦𝑠
𝑥=
($1500)(0.05)

$25 = ($1500)(0.05)(

𝒙 = 𝟏𝟐𝟏. 𝟔𝟕 𝒅𝒂𝒚𝒔

2. Find the accumulated Amount A if the principal P
Is invested at the interest rate of r/year for t years.
a. p = $1000, r = 5½%, t = 6, compounded annually.
𝐴 = 𝑝(1 + 𝑟)𝑡
𝐴 = $1000(1 + 0.055)6
𝑨 = $𝟏𝟑𝟕𝟖. 𝟖

b. p = $180,000, r = 6%, t = 6¼, compounded monthly.
𝐴 = 𝑝(1 + 𝑟)𝑡
0.06 12∗6.25
𝐴 = $1000 (1 +
)
12
𝑨 = $𝟏𝟒𝟓𝟑. 𝟔

3. Find the effective rate corresponding to the given
Nominal rate.
5%/year compounded quarterly.
𝑟 𝑚
𝑟𝑒𝑓𝑓 = (1 + ) − 1
𝑚
0.05 4
𝑟𝑒𝑓𝑓 = (1 +
) −1
4
𝒓𝒆𝒇𝒇 = 𝟎. 𝟎𝟓𝟎𝟗𝟓

4. An individual purchase a 4-year $10,000 promissory
Note with an interest rate of 5.5%/year compounded
semiannually. How much did the note cost?
𝐴 = �...


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