Tuesday

September 2, 2014

September 2, 2014

Posted by **Nieda** on Thursday, September 15, 2011 at 9:38am.

i) simple interest at 12%, or

ii) a loan at 10% compounded monthly.

Which loan results in less interest due ?

b) What interest rate compounded quarterly will give an effective interest rate of 7% ?

- Math -
**Henry**, Friday, September 16, 2011 at 5:03pm1. I = Prt = 1000 * 0.12 * 2 = $240.

2. Pt = Po*r*t / (1 - (1+r)^-t,

r=(10% / 12) / 100% = 0.00833 = Monthly

% rate expressed as a decimal.

t = 2yrs * 12mo/yr = 24 Months.

Pt=1000*0.00833*24/(1 - (1.00833))^-24

= 199.992 / 0.180583955 = $1107.47.

I = 1107.47 - 1000 = $107.47

Option 2gives lowest Interest.

**Answer this Question**

**Related Questions**

Math - Serena wants to borrow $15 000 and pay it back in 10 years. Interest ...

Finite Math - In August 2008, General Motors was offering the choice of a 2.9% ...

uno - You decide to borrow $200,000 to build a new house. The bank charges an ...

fianance - 3. You decide to borrow $200,000 to build a new house. The bank ...

finance - 3. You decide to borrow $200,000 to build a new house. The bank ...

finance - 3. You decide to borrow $200,000 to build a new house. The bank ...

compund interest - Payments of $1800 and $2400 weere made on a $10,000 variable-...

Math - Serena wanst to borrow $15 000 an pay it back in 10 years. Interest rates...

Compound Interest : Future Value and Present Value - Payments of $1800 and $2400...

Math - How do I calculate the monthly payment required to repay a $250,000 loan ...