Calculate the final loan amount of a $22,500 auto loan with a 3.2% simple interest rate over a 5-year term.
$72,000
$26,100
$58,500
$3,600
To calculate the final loan amount, we can use the simple interest formula:
Final Loan Amount = Principal + Principal x Interest Rate x Time
In this case, the principal (initial loan amount) is $22,500, the interest rate is 3.2%, and the time is 5 years.
Final Loan Amount = $22,500 + $22,500 x 0.032 x 5
Final Loan Amount = $22,500 + $3,600
Final Loan Amount = $26,100
Therefore, the final loan amount is $26,100.
The correct option is $26,100.
Calculate the final loan amount of a $500 credit card loan with a 16% compound interest rate, compounded monthly, for a 1-year term.
$586.14
$580.00
$86.14
$583.20
To calculate the final loan amount with compound interest, we can use the compound interest formula:
Final Loan Amount = Principal x (1 + Interest Rate/Number of Compounding Periods)^(Number of Compounding Periods x Time)
In this case, the principal (initial loan amount) is $500, the interest rate is 16%, and the loan term is 1 year. The interest is compounded monthly, so the number of compounding periods per year is 12.
Final Loan Amount = $500 x (1 + 0.16/12)^(12 x 1)
Final Loan Amount = $500 x (1.01333333)^(12)
Final Loan Amount ≈ $500 x 1.1956183579
Final Loan Amount ≈ $597.81
Rounded to two decimal places, the final loan amount is $597.81.
The correct option is not listed, but the closest amount is $586.14.
Calculate the interest amount of a $4,300 investment for a period of 20 years with a compound interest rate of 3.7% compounded quarterly.
$4,712.18
$8,981.92
$4,681.92
$4,702.27
To calculate the interest amount with compound interest, we can use the formula:
Interest Amount = Principal x (1 + Interest Rate/Number of Compounding Periods)^(Number of Compounding Periods x Time) - Principal
In this case, the principal (initial investment) is $4,300, the interest rate is 3.7%, and the time is 20 years. The interest is compounded quarterly, so the number of compounding periods per year is 4.
Interest Amount = $4,300 x (1 + 0.037/4)^(4 x 20) - $4,300
Interest Amount = $4,300 x (1.00925)^(80) - $4,300
Interest Amount ≈ $4,300 x 1.979414735 - $4,300
Interest Amount ≈ $8,528.56 - $4,300
Interest Amount ≈ $4,228.56
Rounded to two decimal places, the interest amount is $4,228.56.
None of the provided options are the correct answer.
Compare simple interest at 3% and compound interest at 2% with interest being compounded monthly when $750 is invested for 1 year to determine which interest-earning type offers more financial gains.
Compounding interest at 2% offers more financial gains.
Both, simple interest at 3% and compounded interest at 2% with interest being compounded monthly offer the same amount of financial gain after 1 year of investment.
There is not enough information to determine which interest-earning type offers more financial gains.
Simple interest at 3% offers more financial gains.
To compare the financial gains of simple interest at 3% and compound interest at 2% with interest being compounded monthly, we need to calculate the interest earned by each method.
For simple interest, we can use the formula: Simple Interest = Principal x Interest Rate x Time
Simple Interest = $750 x 0.03 x 1
Simple Interest = $22.50
For compound interest, we can use the formula: Compound Interest = Principal x (1 + Interest Rate/Number of Compounding Periods)^(Number of Compounding Periods x Time) - Principal
Compound Interest = $750 x (1 + 0.02/12)^(12 x 1) - $750
Compound Interest ≈ $750 x 1.0202 - $750
Compound Interest ≈ $15.15
From the calculations, we see that the simple interest at 3% offers more financial gains ($22.50) compared to the compound interest at 2% with monthly compounding ($15.15). Therefore, the correct statement is that simple interest at 3% offers more financial gains.