Question

A certain college graduate borrows $7400 to buy a car. The lender charges interest at an annual rate of 10%. Assuming that interest is compounded continuously and that the borrower makes payments continuously at a constant annual rate k dollars per year, determine the payment rate k that is required to pay off the loan in 2 years. (Round your answer to two decimal places.) $ per yr Determine how much interest is paid during the 2-year period. (Round your answer to two decimal places.)

Answer 1

Ans) total money = 7400 rate 10 % time 2 year 1 but borrower return K dollars in 1-year So total amount after 1 year is time final amount after I year = 100 money X (-+ + rate 10 = 7400x 11+ 100 7400 x No 100 - 8140 after one year I year K dollars amount he return $0 after total amout nate = 10% = 1 year = 8140 -K time Omout borrower have to pay after 1 year (8140 -K) (1+0) |$140 - JX110 100 to all Again He He pays pay K dollars amount he had taken SO

K - 18140 - K) X11 2. K = 814 x11 - )-IK 2-1K = 814 x 11 K 814 x 17 2-1 K 4263.81 per year total interst He pay after two year = (8140 - 7400) + (1 8140 -K)x= -(8140-k] 11 74 0 + [ 8140 (1-7-1) + (1-1-1)] = 740+ [814 = .1 X 4263081] = 740 + 814 - 426.381 - 1127.62 Ans