Given:
Lamont cotton is 4% commission on the first 10,000 of monthly sales and 10% on all sales over 10,000.
Consider his last month sales is 38,000.
To find:
The total commission.
Solution:
4% commission on the first 10,000 of monthly sales is
Sales over 10,000 is
10% commission on all sales over 10,000 is
Now, the total commission is
Therefore, the total commission is 3,200.
<em>The compound interest is applied, that is to say, each year the interest produced is accumulated to the outstanding capital and the interest of the next period is calculated on the new outstanding capital.</em>
The formula for calculating compound interest is:
Compound interest = Total amount of Principal and interest in future less Principal amount at present = [P(1 + i)ⁿ] – P
(Where P = Principal, i = nominal annual interest rate in percentage terms, and n = number of compounding periods)
[P(1 + i)ⁿ] – P = P[(1 + i)ⁿ – 1] = $150[(1 + 12/100)⁸ – 1] = $150[(1.12)⁸ – 1] = $150[2.47596317629 - 1] = $150[1.47596317629] = $221.39
Total amount = $150 + $221.39 = $371.39
Answer : A.) $371.39