Question

Simple and Compound Interest a. For each of the following notes, calculate the simple interest due at the end of the term. Round to the nearest dollar. Note Principal Rate Term $18,000 4% 6 years $18,000 6% 4 years $18,000 8% 3 years Note 1 $ Note 2 $ Note 3 5 b. Compute the amount of interest due at the end of the term for each of the above notes assuming interest is compounded annually. Use Excel or a financial calculator for your computations. Round your answer to the nearest dollar. Note 15 Note 2 $ Note 3 5 Save Answers

Answer 1

Solution:-

a. Simple Interest

Note	Interest	Calculation
Note 1	4,320	18,000 * 4% * 6
Note 2	4,320	18,000 * 6% * 4
Note 3	4,320	18,000 * 8% * 3

b. Compounded Annually:-

Note	Interest	Calculation
Note 1	4,776	$18,000(1+\frac{0.04}{1})^{6}$
Note 2	4,725	$18,000(1+\frac{0.06}{1})^{4}$
Note 3	4,675	$18,000(1+\frac{0.08}{1})^{3}$

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