● 1. Money borrowed by an employee on September 1 = $2,000
Money to be repaid exactly 1 year later = $2,800.
(i) Interest amount = $800 ($2,800-2,000).
(ii) Interest rate calculation:
A = P(1+i)^n
2,800 = 2,000(1+i)^1
1+i = 2,800/2,000 = 1.4
i. = 1.4 – 1 = 0.4
Interest rate = 40%.
2. a) Amount earned after 1 year = $750.
Interest rate = 25%
Amount deposited one year ago:
P = A/(1+i)^1
P = 750/1.25
Amount deposited one year ago (P) = $600.
ii) Interest earned during this time period = $750 – 600
Interest earned during this time period = $150.
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