The following information on selected cash transactions for 2021 has been provided by Coronado Industries: Proceeds from sale of
2 answers:
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Answer:
You will receive $201.38 more interest if the investment is made with a compound interest rate rather than a simple interest rate.
Explanation:
<u>Simple interest rate</u>
We can calculate how much interests you'd obtain if you deposited the $2,600 in a simple interest rate account.
We start using the following formula for calculating the simple interests:
Where:
<em>I</em> are the interests per year,
<em>P</em> is the amount being invested,
<em>r</em> is the interest rate.
Replacing in the formula with the given values we have:
We then proceed to multiply this result by the <em>given number of years</em>, which is 8. We get .
Finishing with the <em>simple interest rate</em>, if we wanted to know how much is the investment worth at the end of a 8 year period, we must merely add <em>the principal</em> (the $2,600) to the total interests after the end of the period ($1040). So .
We'll use these results later.
<u>Compound interest rate</u>
The formula for compound interests is the following:
Where:
<em>I</em> is the value of the investment after <em>n</em> years,
<em>P</em> is the principal amount being invested,
<em>r</em> is the interest rate,
<em>n</em> are the number of years the investment is compounded.
Replacing in the formula with the given values we have:
After the 8 year period, the investor will have $3841.38 in it's compounded interest account.
<u>Comparing these results</u>
<u></u>
We can simply substract the value of both investments at the end of a 8 year period, to determine how much more interest does the compound interest rate account give in relation to a simple interest rate account.
The values we've gotten were:
$3,640 for the simple interest rate account, and
$3,841.38 for the compounded interest rate account.
. Therefore the answer is: the account that pays compounded interests will pay $201.38 more to this invididual, compared to an account that pays simple interest.
Answer:
tractor 35,127,42 debit
note payable 32,172.42 credit
cash 3,000 credit
--to record issuance--
Note payale end of 2018
39,584.19
note payables at Dec 31th
Note payable at the end of 2019
39,584.19
note payables at Dec 31th
Explanation:
As the note has zero.interest we discount the note to get the present value:
Maturity $44,000.0000
time 3.00
rate 0.11
PV 32,172.42
The difference will be a discount that will acrrue interest overtime.
the truck will enter the accounting net of interest charges thus:
3,000 downpayment + 32,127.42 = 35,127.42
interest will be: 32,127.42 x 1.11 = 32,127.41
<u><em>Then, do the same for 2019</em></u>
(32,127.41 + 3,532.0162) x 1.11 = 39,584.19