Question

2 year(s) ago, Mary invested 32,663 dollars. She has earned and will earn compound interest of 9.95 percent per year. In 1 year(s) from today, Albert can make an investment and earn simple interest of 4.91 percent per year. If Albert wants to have as much in 6 years from today as Mary will have in 6 years from today, then how much should Albert invest in 1 year(s) from today?

1 year(s) ago, Goran invested 56,351 dollars. He has earned and will earn 6.21 percent per year in compound interest. If Anna invests 69,215 dollars in 2 year(s) from today and earns simple interest, then how much simple interest per year must Anna earn to have the same amount of money in 8 years from today as Goran will have in 8 years from today? Answer as a rate in decimal format so that 12.34% would be entered as .1234 and 0.98% would be entered as .0098.

Answer 1

Marys Investment

PV = 32663, N = 8, r = 9.95%,

Find FV as PV*(1+r)^n

=32663*1.0995^8

=69761.84

Alberts investment

Amount= 69761.84, Rate = 4.91%, N=5

Using simple interest formula

Amount = Principal*(1+ Rate*N)

69761.84= Principal*(1+ 0.0491*5)

Principal = 69761.84/1.2455

=56011.11

He must invest $56011.11

Q2

GoranS Investment

PV = 56351, N =9, r = 6.21%,

Find FV as PV*(1+r)^n

= 56351*1.0621^9

=96914.85

Annas Investment

Using simple interest formula

Amount = Principal+ Interest

96914.85= 69215+ Interest

Interest = 27699.85

Annual interest = 27699.85/ 6 = 4616.641

Rate = 4616.641/ 69215 = 6.67%

Answer is 0.067