Willian bought 11 books. He decided to present 2 books to each of his friends and still have one book left. Find the number of f
2 answers:
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Answer:
A. The option that results in the smaller finance charge/interest is option 1
B. The option that will result in the smaller monthly payment is option 1
C. The interest they will earn in 4 years, I = $6,643.972
D. The time it will take for them to earn an interest of $500 by loaning $5,600 at 1.5% is approximately 5.95 years
Step-by-step explanation:
A. The simple interest, I, formula is given as follows;
Where;
P = The principal
R = The rate
T =The time given for the loan
For Option 1 the first option, we have;
Down payment = 0.2 × $5600.00 = $1,120.00
Principal = $5600.00 - $1,120.00 = $4,480.00
For Option 2. the second option, we have;
P = $5600.00
The option that results in the smaller finance charge is option 1
B. For option 1, the total amount = Principal + Interest
∴ The total amount remaining = $4480 + $672 = $5,152
The monthly payment = A/N
Where;
A = The total amount yet to be paid out of the loan = $5,152
N = The number of time periods = 3 × 12 = 36 months
The monthly payment = $5,152/36 =
For option 2, the total amount = Principal + Interest
∴ The total amount remaining = $5,600 + $1176 = $6776
The monthly payment = A/N
Where;
A = The total amount yet to be paid out of the loan = $6,776
N = The number of time periods = 3 × 12 = 36 months
The monthly payment = $6,776/36 =
Therefore, the option that will result in the smaller monthly payment is option 1
C. For a compound interest on a principal of $5,600 invested for 4 years in a savings account that gives an interest rate 21.6% per annum, we have;
We have, using the annual rate, rather than calculating for the monthly rate;
Therefore, the amount they will have in 4 years ≈ $ 12,243.972
The interest they will earn in 4 years, I = A - P ≈ $ 12,243.972 - $5,600 = $6,643.972
The interest they will earn in 4 years, I = $6,643.972
D. To earn an interest of $500 at an interest rate of 1.5%, we have;
From which we have;
Therefore, the time it will take for them to earn an interest of $500 by loaning $5,600 at 1.5% is approximately 5.95 years.