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).**

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following compounding methods. (Round your answers to the nearest
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Calculate the present value of the compound interest loan.
(Round your answers to the nearest cent.)
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(a) annually
$
(b) quarterly
$

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(a) annually
$
(b) quarterly
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for 15 years.
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1 year.
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Enter the expressions into a calculator. Round answers to the
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Round to the nearest cent
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