Question

Simple and compound interest rate

5. I considered an investment of $ 15,000 made in the present (year 0) and that remains for 15 years. Determine the total amount accumulated at the end of year 15, if the investment offers (a) a simple interest rate of 8% per year, and (b) a compound interest rate of 8% per year effective

6. If a person requires a loan in the amount of $ 25,000 in the present. If your financial institution offers you the loan at a simple interest rate of 14% per year for a period of 4 years, how much will your debt be at the end of the 4 years, if the person decides to wait and not make any payment or credit to credit prior to settlement at the end of the term?

7. If a person requires a loan in the amount of $ 25,000 in the present. Yes, your financial institution offers you the loan at a simple interest rate of 14% per year. What amount will your debt be at the end of the 4 years, if the person decides to make a partial payment of $ 10,000 at the end of year 2, and then wait until the end of the term to settle the rest?.

Answer 1

Answer to Question No. 5:

Part a.
Amount of Investment (Principal) = $15,000
Time (n ) = 15 years
Rate (r ) = 8%

Simple Interest = Principal * Rate * Time
Simple Interest = $15,000 * 8% * 15
Simple Interest = $18,000

Accumulated Amount = Investment Amount + Interest
Accumulated Amount = $15,000 + $18,000
Accumulated Amount = $33,000

Part b.
Amount of Investment (Principal) = $15,000
Time (n ) = 15 years
Rate (r ) = 8%
Accumulated Amount (Amount) = ??

Amount = Principal * (1 + r) ^ n
Amount = $15,000 * (1 + 0.08)^ 15
Amount = $15,000 * 1.08^ 15
Amount = $15,000 * 3.1722
Amount = $47,583