Question

1How much should be invested now at 5.5% simple interest if $8103 is needed in 2 years?

2.Determine the amount due on the compound interest loan. (Round your answers to the nearest cent.)

$13,000 at 4% for 10 years if the interest is compounded in the following ways.

(a) annually
$  

(b) quarterly
$

Answer 1

1.simple interest =principal*interest rate*time period

=(principal*0.055*2)

Total amount =simple interest +principal

8103=0.11Principal+principal

Hence principal=8103/(0.11+1)=$7300

2.a.

We use the formula:
A=P(1+r/100)^n
where
A=future value
P=present value
r=rate of interest
n=time period.

Hence

A=$13000(1.04)^10

=$19243.18(Approx)

b.We use the formula:
A=P(1+r/400)^4n
where
A=future value
P=present value
r=rate of interest
n=time period.

Hence

A=$13000(1+0.04/4)^(4*10)

which is equal to

=$19355.23(Approx).