Answer:
A)You will earn $20311.62 as interest if you deposit $23750 into an investment account for 8 years.
B) The annual interest rate to you charge Vinny in order to make the same amount of interest on his loan as your investment account is 10.69%
Step-by-step explanation:
We are given that Your cousin Vinny wants to borrow $23750. He’s willing to pay you back over 8 years with simple interest.
Your alternative is to invest in the $23750 into an account paying 7.75% compounded monthly.
a)How much interest would you earn in your investment if you deposit $23750 into an investment account for 8 years?
Principal = 23750
Rate of interest = 7.75%
No. of compounds per year = 12
Time = 8 years
Formula :
Where A is the amount
P is the principal
r = rate of interest
n = No. of compounds
t = time
Substitute the value sin the formula :
A=44061.6163406
Interest = Amount - Principal
Interest = 44061.6163406-23750
Interest =20311.62
You will earn $20311.62 as interest if you deposit $23750 into an investment account for 8 years.
B)What annual interest rate to you charge Vinny in order to make the same amount of interest on his loan as your investment account
Principal = 23750
Simple interest =
Hence The annual interest rate to you charge Vinny in order to make the same amount of interest on his loan as your investment account is 10.69%