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DaniilM [7]
3 years ago
8

Interest-on-Interest Consider a $1,500 deposit earning 4 percent interest per year for 7 years. How much total interest is earne

d on the original deposit (excluding interest earned on interest)?
Business
1 answer:
valentina_108 [34]3 years ago
7 0

Answer:

<em>Interest earned </em>     =   $420

Explanation:

T<em>he total worth of the investment after the the investment period compounded at certain rate  is called the Future Value.</em>

Future Value= Principal + compounded interest i.e

FV = P × (1+r)^n

r- rate, FV- future value , n- period

FV = ? , P -1,500, r- 4%, n-7 years

FV = 1,500  ×1.04^(7)

FV = 1973.897669

<em>Interest earned (compound intrest) = FV - Principal amount</em>

                         = 1973.897669 - 1,500

                        =  $473.89

Without interest earning interest.

The amount of interest earned will be computed on the principal only

Interest earned = $1,500× 4%× 7

                         = $420

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The following information pertains to Lightning Inc., at the end of December: Credit Sales $ 20,000 Accounts Payable 10,000 Acco
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Answer:

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21% of $1,600 =    336

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Explanation:

a) Data and Calculations:

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Accounts Payable 10,000

Accounts Receivable 10,400

Allowance for Uncollectible Accounts 400 credit

Cash Sales 20,000

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The accounts receivable balance of $10,400 consists of $7,500 not yet due, $1,600 up to 30 days past due, and $1,300 greater than 30 days past due.

Age Analysis of Accounts Receivable balance of $10,400

                  Not yet due     up to 30 days         greater than 30

                                               past due              days past due

Percentage         7%                         21%                  46%

Balance           $7,500                  $1,600               $1,300

Bad debts          $525                     $336                 $598

Bad debts Expense = $1,459            

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