Calculate the simple interest on a $20,000 loan at an interest rate of 8 percent after 5 years.(1 point)
Responses
$8,000
$8,000
$1,600
$1,600
$80,000
$80,000
$800,000
$800,000
The simple interest can be calculated using the formula: Simple Interest = Principal * Rate * Time.
In this case, the principal (loan amount) is $20,000, the interest rate is 8% (or 0.08 as a decimal), and the time is 5 years.
Using the formula:
Simple Interest = $20,000 * 0.08 * 5 = $8,000
Therefore, the simple interest on the $20,000 loan after 5 years at an interest rate of 8% is $8,000.
Calculate the amount to be paid back after three years on a $3,000 credit card loan with an interest rate of 15% compounded yearly. (1 point)
Responses
$267,572.61
$267,572.61
$4,271.48
$4,271.48
$3,138.08
$3,138.08
$4,562.63
To calculate the amount to be paid back, we can use the formula for compound interest:
A = P * (1 + r)^t
Where:
A = the amount to be paid back
P = the principal (loan amount)
r = interest rate
t = time (in years)
In this case, the principal is $3,000, the interest rate is 15% (or 0.15 as a decimal), and the time is 3 years.
Using the formula:
A = $3,000 * (1 + 0.15)^3 = $3,000 * (1.15)^3 = $3,138.08
Therefore, the amount to be paid back after three years on a $3,000 credit card loan with a 15% interest rate compounded yearly is $3,138.08.
Calculate the amount to be paid back on a $20,000 loan with an interest rate of 12% compounded yearly after five years.(1 point)
Responses
$35,246.83
$35,246.83
$1,030,726
$1,030,726
$51,470
$51,470
$640,000
To calculate the amount to be paid back on a loan with compound interest, we can use the formula:
A = P * (1 + r/n)^(nt)
Where:
A = the amount to be paid back
P = the principal (loan amount)
r = interest rate
n = number of times interest is compounded per year
t = time (in years)
In this case, the principal is $20,000, the interest rate is 12% (or 0.12 as a decimal), the number of times interest is compounded per year is 1 (compounded yearly), and the time is 5 years.
Using the formula:
A = $20,000 * (1 + 0.12/1)^(1*5) = $20,000 * (1 + 0.12)^5 = $20,000 * (1.12)^5 = $35,246.83
Therefore, the amount to be paid back on a $20,000 loan with a 12% interest rate compounded yearly after five years is $35,246.83.
Compare simple interest at 7.5% and compound interest at 7.0% when $4,300 is invested for 2 years to determine which interest earning type will result in a higher balance. Find this balance.(1 point)
Responses
Simple interest at 7.5% results in a higher balance of $645 after 2 years of investment.
Simple interest at 7.5% results in a higher balance of $645 after 2 years of investment.
Simple interest at 7.5% results in a higher balance of $4,945 after 2 years of investment.
Simple interest at 7.5% results in a higher balance of $4,945 after 2 years of investment.
Simple interest at 7.5% results in a higher balance of $4,923.07 after 2 years of investment.
Simple interest at 7.5% results in a higher balance of $4,923.07 after 2 years of investment.
Compound interest at 7% results in a higher balance of $4,945 after 2 years of investment.
To compare the simple interest at 7.5% and compound interest at 7.0% on an investment of $4,300 for 2 years, we can calculate the balances using the respective formulas.
For simple interest:
Simple Interest = Principal * Rate * Time
Simple Interest = $4,300 * 0.075 * 2 = $645
For compound interest:
A = P * (1 + r/n)^(nt)
A = $4,300 * (1 + 0.07/1)^(1*2) = $4,300 * (1.07)^2 = $4,923.07
Comparing the two results, the balance after 2 years with simple interest at 7.5% is $645, and the balance with compound interest at 7.0% is $4,923.07.
Therefore, compound interest at 7.0% results in a higher balance of $4,923.07 after 2 years of investment.
Find the difference in the balance between simple interest at 5% and compound interest at 6% when $900 is invested for a period of 5 years.(1 point)
Responses
$304.40
$304.40
$225
$225
$79.40
$79.40
$1,204.40
To find the difference in the balance between simple interest at 5% and compound interest at 6% when $900 is invested for a period of 5 years, we can calculate the balances using the respective formulas.
For simple interest:
Simple Interest = Principal * Rate * Time
Simple Interest = $900 * 0.05 * 5 = $225
For compound interest:
A = P * (1 + r/n)^(nt)
A = $900 * (1 + 0.06/1)^(1*5) = $900 * (1.06)^5 = $1,204.40
The difference in the balance is given by:
Difference = Compound Interest - Simple Interest
Difference = $1,204.40 - $225 = $979.40
Therefore, the difference in the balance between simple interest at 5% and compound interest at 6% when $900 is invested for 5 years is $979.40.