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**

5. A person has applied for a loan of $ 25,000 to a banking
institution that charges an interest rate of 12% per year,
compounded semi-annually. If she wants to repay the loan in eight
equal annuities, but make the first payment on credit until the end
of the third year, and thereafter pay it annually, determine the
size (amount) of these annuities (8).

Compound interest is computed on the principal and any interest
earned that has not been withdrawn.
Compound interest is computed on the
principal amount plus paid interest.
principal amount plus accrued interest.
principal amount plus earned interest left on deposit.
principal amount only.
_____
Which of the following is false?
Simple interest is generally applicable to long-term
situations.
For the investor, compound interest is more desirable than
simple interest.
Simple interest uses the initial principal to compute interest
in each...

a. You are considering an investment of $55,000 in an account
that pays 8.3 percent compound interest. How much less interest
would you earn in a 3-year period if the interest was simple?
(10%) b. Your firm wants to borrow $250.000 for 10 years from
the bank in order to pursue a big
investment opportunity. The bank will lend the money but it
requires an upfront fee of $ 10,000. The interest is 6.3%. How much
will you be paying...

If you can earn 6.5% in simple interest on an investment of
$15,000, how much will you have in seven years?
Suppose you borrow $35,000 and you are going to make annual
payments of $3,000 for nine years. What interest rate are you
paying on the loan?
Another bank will let you borrow the $20,000 for your new car.
You can still borrow at 7% per year. If you take the 3-year loan,
what are your monthly payment?

SIMPLE INTEREST:
1. How much is the amount and simple accumulated interest of $
16,750, to 10.75% for five years and seven months?
2. Find the difference between exact simple interest and
ordinary simple interest when calculating $ 35,600 to 77 7/8% for
180 days?
3. If you deposited $ 31,740 at what%, would you accumulate an
amount of $ 61,000 in seven years?
II. COMPOUND INTEREST:
1. Find the amount and compound interest from $ 21,760 to 71⁄4%
for...

You borrowed Ȼ10,000 at 14% compound annual interest for four
(4) years. The loan is repayable in four equal installments payable
at the end of the year
i. What is the annual payment that will amortize completely
the loan over four years (you may wish to round to the nearest
dollar)
ii. Of each equal payment, what is the amount of interest and
the amount of loan principal?

If a capital sum of money P is placed on compound interest at a
rate I compounded annually, show that the future sum of the F,
after the number of interest periods n could be expressed as:
If a sum of £25,000 is invested at the interest rate of 8
percent per year for 10 years. How much will the investor receive
at the end of investment.
To receive £10,000 in the future 20 years from now, how much
should...

7.
A ten-year fund earning compound interest at a constant rate is
withdrawn continuously, where the annual interest rate, i, and the
rate for annual payments, $X/year, are not revealed. You are told
that the present value of the fund is $10,000 and the accumulated
value of the fund at the end of ten years is $25,000. Find i and X.
(Answer: i=9.596%, X=1,527.15)
Math Interest Theory/Financial Math

If Tom deposit $10,000 to Bank A with simple interest rate of 2%
per quarter for 5 years. How much will he get at the end of year 5?
If Matt deposit $10,000 to Bank B with compound interest rate of 2%
per quarter for 5 years. How much will he get at the end of year 5?
Please explain the difference between the amount that Tom and Matt
get?

Paulo borrowed $15,000 at a 14% annual rate of interest to be
repaid over 3 years. The loan is amortized into three equal,
annual, end-of-year payments.
a) Calculate the annual, end-of-year loan payment.
b) Prepare a loan amortization schedule showing the interest and
principal breakdown of
each of the three loan payments.
c) Explain why the interest portion of each payment declines with
the passage of time.

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