Question

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A 00 (c) in 35 years? (d) in 50 years? 3-20 Rita borrows $2000 from her parents. She repays them $2600. What is the interest rate if she pays the $2600 at the end of (a) Year 2? (b) Year 3? (c) Year 6? (d) Year 10? 3-21 A savings account earns 2501. .

Answer 1

3-20 Principal amount $2000 Amount at end of year 1 = $2600 . Interest paid = $600 ( 2600-2000) the Since rate question. suuple There are 2 kreds of interest interest & compound Interest Simple Interest: It is calculated on principal amount on a daily / monthly annual basis & does not add any interest rate on the interest amount gathered on principal amount.

Formula! PXRXT DELTA PONO 100 P= Prinupal Amount R = Rate of Interest Lt.) T= No. of years 2. Compound interest! It is essentially interest on interest'. for annual compound interest amputed annually > Formula: A = PcHrt A = amount other variables are same as in SI. form of interest is used, Since question we assume doesn't mention use simple which interest - For year 1: SI=600 - 600 = PXRXT 100 600 = 20ee XXI 100 R=301 year 2 ie T=2 at at pays the end of the ee SL - 2000 X RX2- R = 15) 20ee XRX2 600 - 100

6) If she pays 2600 at end of year 3. = 000 T= 3. , SĨ - 600 ) 600 = 2000 XR X 3 leo R=104 when T=6, p= 2000 , SI=600 600 = 2000 XK X6 R=50% when T=10, P = 2000 SI = 600 600 - 2000 XRX10 100 R=3% NOTE: of the interest is compounded annually, we can - calculate using the below formula! for t= 2 5 oo 200 A=' 2600 = 2000 (tr 1.3 = (1+r) 2 Taking log both sides wg 13 = 2 log(lth 7 / wg 13 i Logo _ 1/2log, a leglley) 3__ltra e [a= e 1/2 log13 - 1