2. Suppose that the terms on the above loan are changed so that the rate is stil
ID: 2787944 • Letter: 2
Question
2. Suppose that the terms on the above loan are changed so that the rate is still 6%, but the loan was made June 1, 2011 and to be repaid September 31, 2012. How much will you need to pay back on 9/31/12?3. What was the original principal for an 8% simple interest bank account that holds $4340 after 3 years ?
4. A $650 loan is to be repaid in 4 years with an interest rate of 8% compounded yearly. What total amount will be due in 4 years?
4b. The interest is the difference between your principal (borrowed) and how much you paid altogether. How much interest will you pay? (be careful: it’s NOT i=Prt)
5. Repeat Problem #4, with the interest compounded monthly. What total amount will be due in 4 years? 5b.. How much of this is interest? Suppose that the terms on the above loan are changed so that the rate is still 6%, but the loan was made June 1, 2011 and to be repaid September 31, 2012. How much will you need to pay back on 9/31/12 2. 3. what was the original principal for an 8% simple interest bank account that holds $4340 after 3 years? AS650 loan i will be due in 4 years? s to be repaid in 4 years with an interest rate of 8% compounded yearly, what total amount 4 4b. The interest is the difference between your principal (borrowed) and how much you paid altogether. How much interest will you pay? (be careful: it's NOT i-Prt) 5, Repeat Problem #4, with the interest compounded monthly, what total amount will be due in 4 years? 5b.. How much of this is interest?
Explanation / Answer
(3) Amount = principal [1 + interest* time]
$4340 = principal [1 + 0.08 * 3]
$4340 = principal * 1.24
$4340 / 1.24 = principal
principal = $3500
(4) Amount = principal [1 + interest/ number of compounding]number of compounding * time
Amount = 650 [1 + 0.08/ 1]1*4
Amount = 650 [1.08]4
Amount = 650 * 1.36049
Amount = $884.32
(4b) Total interest amount = Total amount - principal amount
= $884.32 - $650
= $234.32
(5) Amount = principal [1 + interest/ number of compounding]number of compounding * time
Amount = 650 [1 + 0.08/12]12 * 4
Amount = 650 [1 + 0.00667]48
Amount = 650 [1.00667]48
Amount = 650* 1.37588
Amount = $894.32
(5b) Total interest amount = Total amount - principal amount
= $894.32 - $650
= $244.32
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