Question

6s PROBLEM 1. what an ount will be owed in S year, i, SS00 "browed now at 10% per year simple interest Answer 57,300 rd:: For what period of time will S500 have to be invested to smount to$625 earns ธ0% simple interes. Per an.suns? Anawer 2.5 years 3. What is the principal amount if the principal plus interest at the end of I years is$14,000 for a simple interest "ase of 12% per anum? Compare the interest earned by $5,000 for 5 years at15% simple interest with r that earned by the same amount for 5 years at 15 % compounded annually s. If $160 interest is earned in two months on an investment of $8,000, what is the annual rate of simple interest? Answer: 12% 6, what is the principal and interest due on August 13 on a 9% per year sim- ple interest loan of $2,000 taken out on June 137 Assume that no interest is earned on the day the loan is originated and the day it is paid (only full days earn interest) A person lends $10,000 at 8% simple interest for 5 years. At the end of this time the entire amount (principal plus interest) is invested at 12% compounded annually for 10 years. How much will accumulate at the end of the 15-year pe- riod? Answer: $43,484 8.) Draw a cash flow diagram for the loan and investment situation described in Problem 7 from the viewpoint of the person making the loan and the subse- quent investment 90 For an interest rate of 10% compounded annually, find: a. How much can be loaned now if $2,000 will be repaid at the end of 3 years? b. How much will be required 6 years hence to repay a $50,000 loan made now? What will be the amount accumulated by each of the following presen investments? a. $5,000 in 8 years at 13% compounded annually. Answer:513290 b. $1,500 in 15 years at 15% compounded annually. c. $20,000 in 38 years at 16% compounded annually. d, $3,500 in 70 years at 9% compounded annually. e.. $5,500 in 35 years at 10.5% compounded annually. f. $9,000 in 145 , ,,ars at 7% compounded annually.
I need steps for the answer

Answer 1

Total simple interest for N years = Principal x Number of years x Interest rate

(1)

Interest for 5 years ($) = 5,000 x 5 x 10% = 2,500

Amount owed ($) = Principal + Interest = 5,000 + 2,500 = 7,500

(2)

Interest for the period ($) = 625 - 500 = 125

If number of years be N, then

125 = 500 x N x 10%

125 = 50 x N

N = 2.5 years

(3) Number of years is hazy and unreadable.

(4)

With simple interest,

Interest after 5 years ($) = 5,000 x 5 x 0.15 = 3,750

With compound interest,

Total amount after 5 years ($) = 5,000 x (1.15)⁵ = 5,000 x 2.0114 = 10,057

Interest ($) = Amount - Principal = 10,057 - 5,000 = 5,057

Therefore, compound interest is higher by $(5,057 - 3,750) = $1,307.

NOTE: As per Answering Policy, 1st 3 questions are answered.