if you had 1500 now and invested at 8% how much will it be in 10 years 2) (a) If
ID: 1216709 • Letter: I
Question
if you had 1500 now and invested at 8% how much will it be in 10 years 2) (a) If you had $1,500 now and invested it at 8%, how much would it be worth 10 years from now (b) A local store charges 1.25% each month on the unpaid balance for its charge account. What nominal annual interest rate is being charged? What is the effective interest rate? 3) A man buys a car for $3,500 with a down payment of $500. He pays for the remainder in twenty-four equal monthly payments with interest rate at 12% per annum, compounded monthly. What is his monthly payment?Explanation / Answer
Interest rate is-8%.Potential amount is-1500 and invested for 10years.
The formula to find out the actual amount is,
A=P(1+r/n)nt.
=1500(1+.08)10
=1500(1.08)10
=3238.35=$3238.So it will be $3238 after 10 years.
(b)Local store charges interest rate is1.25% each month.
The formula of nominal annual interest rate is
r={(1+R)1/k-1}*k
Where k=number of compounds in a year.which is-12 here.
So,r={(1+1.25%)1/12-1}*12
=.0124289522.=.012
The formula of effective annual interest rate is
R=(1+r/k)k-1
Putting value of r we have-
R=1.0125-1=.012.
(3)monthly payment formula is=[rate+rate/[(1+rate)month]-1]*principal.
=12%+12%/[(1+12%024]-1]*3000 Down payment was 500 so rest of amount is3000.
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