plss help this problem approximate accumolation method,step by step solving plsss..how much must be paid on due date june 26,2010, on a loan of 3,5,000 made on december 26,1989 with interest rate of 4 1/2% cnverted semianually
What is the approximate accumulation method?
Do you mean $35,000?
yes 35,000 solve using the table chart in compounded interest thanks
To calculate the amount that must be paid on the due date using the approximate accumulation method, follow these step-by-step instructions:
Step 1: Determine the time period
First, you need to determine the time period between December 26, 1989, and June 26, 2010. In this case, the time period is approximately 20.5 years.
Step 2: Convert the interest rate
Next, you need to convert the interest rate of 4 1/2% to a decimal form. Divide 4 by 100 to get 0.04, then add 0.005 to convert the fraction 1/2 to a decimal. As a result, the interest rate is 0.045.
Step 3: Determine the number of compounding periods
Since the interest is compounded semiannually, you need to calculate the number of compounding periods. Multiply the number of years (20.5) by 2 to get 41.
Step 4: Calculate the approximate accumulation
Now, use the formula for the approximate accumulation method:
Approximate accumulation = Principal amount * (1 + interest rate)^(number of compounding periods)
In this case, the principal amount is 3,500,000.
Approximate accumulation = 3,500,000 * (1 + 0.045)^41
Step 5: Calculate the amount to be paid on the due date
Finally, calculate the amount to be paid on the due date by subtracting the principal amount from the approximate accumulation:
Amount to be paid on the due date = Approximate accumulation - Principal amount
Make sure to perform the calculations accurately to arrive at the final answer.