(2 points) The compound interest formula is F Pl + i)\" where F Is the total amo

Question

(2 points) The compound interest formula is F Pl + i)" where F Is the total amount due, P is the intial cost or amount of money, i is the interest rate, and n is the number of periods interest is computed. A student purchases a $1200 laptop computer for school. The deal does not require payment until 3 years later. If interest is computed monthly, how much does the student have to pay at the end of 3 years? The monthly interest rate is 1.5 percent. If the cost of the laptop is the same, how much does the student owe if the interest rate is 18 percent computed annually

Explanation / Answer

P = 1200

i = interest = 1.5 % = 0.015

n = number of period = 36

F = P (1 + i)n

F = (1200) (1 + 0.015)36

F = 2051

P = 1200

i = interest = 18 % = 0.18

n = number of period = 3

F = P (1 + i)n

F = (1200) (1 + 0.18)3

F = 1972

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