1) Discount Note: Julie borrowed $3650 from her bank for 18 months using a 7.6%
ID: 3196240 • Letter: 1
Question
1) Discount Note: Julie borrowed $3650 from her bank for 18 months using a 7.6% discount note. How much did she pay for the use of the money? How much did she receive from the bank and what was the actual rate of interest paid? For Problems 2,3 and 4, set up the formulas and then find an on-line calculator in which to enter the appropriate information and answer the questions 2) Compound Interest-Interest Earned: You put $10,000 into an investment vehicle paying 2.5% compounded monthly for 5 years. How much will you have at the end of the five years? 3) Compound Interest-Annual Percentage Yield: You borrow $10,000 at 3% for 2 years, what is the 4) Compound Interest-Present Value: what do you need to put into an investment vehicle paying 4% interest compounded monthly to have $75000 after 5 years?Explanation / Answer
ANSWER 1.
but we know that the bank discount (or B) = MDT. Therefore, we can substitute MDT in place of B in the following equation.
P = M - B
P= M-MDT (M MONEY , D DISCOUNT, T TIME )
P = 3650 - (3650*(18/12)*(7.6/100)
P= 3650 - 416.1
P= 3233.9
JULIE RECEIVES $3233.9 BUT MUST PAY BACK $3650
actual rate of interest = (416.1/3650)*(1/1.5) = 7.6%
ANSWER 2.
$1250 as calculated by the calculator
ANSWER 3 lacks information
ANSWER 4
$61644.53 calculated by the calculator
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