Question

1. Find the present value of an investment that is worth $19,513.75 after earning 3% simple interest for 512 years.

2. Mr. Clopu buys an 18-month CD that pays 434% simple interest for $5,000. Find the value of the CD at the end of its term.

3. The table below shows the activity on the credit card statement of Miss Pepper Mills for the month of April. She started the month with a balance of $342.57. Date Activity Location A

Date	Activity	Location	Amount
04/05	Payment	Payment	$200.00
04/15	Charge	Gas	$26.37
04/22	Charge	Macy’s	$105.42
04/25	Charge	Starbucks	$4.24

a. Find the average daily balance.

b. If her card charges an 18.5% annual interest rate on her average daily balance, calculate Miss Pepper Mill’s finance charge for the month of April. (Make sure to use the method -- formula I=Prt -- shown in the lecture video.

Answer 1

Dear student, only one question is allowed at a time. I am answering the first question

1)

In simple interest,

Amount = Principal + Simple Interest on Principal

Where,

Amount = $19,513.75

Principal = To be calculated

Interest rate = 3% or 0.03

Time = 512 years ( as typed in the question )

Simple Interest = Principal x Rate x Time

= Principal x 0.03 x 512

= 15.36 x Principal

Now, putting the values in equation of amount we get

$ 19,513.75 = Principal + [ Principal x 15.36 ]

So, Principal x [ 1 + 15.36 ] = $19,513.75

So, Principal = $19,513.75 / 16.36

= $ 1,192.77

In case the number of years is 5.5 ( 5 1 / 2 ) then the answer will be different but the methodology will be same. I think 512 has been posted by mistake and so I am writing this but I have solved for what has been posted