Find all dollar amounts correct to the nearest cent, and express the rate as a percentage correct...
Question:
Find all dollar amounts correct to the nearest cent, and express the rate as a percentage correct to two decimal places. Use a 365-day year and give your answers to the next higher month. Suppose you plan to lend $100 for 50 years at 10% per year.
(a) How much will you have at the end of 50 years if you go with a simple interest loan?
(b) Suppose you want to compound annually. How much will you have at the end of 50 years?
(c) Suppose you want to compound monthly. How much will you have at the end of 50 years?
(d) Suppose you want to compound daily. How much will you have at the end of 50 years?
Simple And Compounded Interest:
Simple interest is calculated by formula
{eq}\displaystyle A=P\left(1+rt\right) {/eq}
Where, when interest on interest calculated , it is known as compounded interest.
Compound interest formulated as
{eq}\displaystyle A=P\left(1+\frac{r}{n}\right)^{nt} {/eq}
Where,
P : principal ( present value)
A : amount ( future value ) at the end of total periods
n : number of compounding periods per year
r : rate per year
t : total time in years.
Answer and Explanation: 1
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Given data
{eq}\displaystyle P=100\\ \displaystyle r=10\%=0.1\\ \displaystyle t=50 {/eq}
(a)
Simple interest after 50 years will be
{eq}\disp...
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Chapter 16 / Lesson 7Learn how to solve for interest rate. Discover the interest formula, study simple interest problems, and examine the importance of being able to calculate interest.
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