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Problem 1

Compute the simple interest for the specified period and the future value at the end of the period. Round all answers to the nearest cent. $$ \$ 2,000 \text { is invested for } 1 \text { year at } 6 \% \text { per year } $$

Expert verified

The simple interest is \(120 and the future value at the end of the period is \)2,120.

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Chapter 5

Compute the specified quantity. Round all answers to the nearest month, the nearest cent, or the nearest \(0.001 \%\), as appropriate. Fees You take out a 3-year, 7,000 loan at 8\% simple annual interest. The lender charges you a \(\$ 100\) fee. Thinking of the fee as additional interest, what is the actual annual interest rate you will pay?

Chapter 5

You take out a 2-year, \(\$ 5,000\) loan at \(9 \%\) interest with monthly payments. The lender charges you a \(\$ 100\) fee that can be paid off, interest free, in equal monthly installments over the life of the loan. Thinking of the fee as additional interest, what is the actual annual interest rate you will pay?

Chapter 5

Determine when, to the nearest year, $$\$ 3,000$$ invested at \(5 \%\) per year, compounded daily, will be worth $$\$ 10,000$$.

Chapter 5

Are based on the following table, which shows the 2008 annual inflation rates in several Latin American countries. \({ }^{13}\) Assume that the rates shown continue indefinitely. $$\begin{array}{|l|c|c|c|c|c|c|c|} \hline \text { Country } & \text { Argentina } & \text { Brazil } & \text { Bolivia } & \text { Nicaragua } & \text { Venezuela } & \text { Mexico } & \text { Uruguay } \\ \hline \text { Currency } & \text { Peso } & \text { Real } & \text { Boliviano } & \begin{array}{c} \text { Gold } \\ \text { cordoba } \end{array} & \text { Bolivar } & \text { Peso } & \text { Peso } \\ \hline \begin{array}{l} \text { Inflation } \\ \text { Rate (\%) } \end{array} & 9.2 & 6.3 & 15.1 & 13.8 & 25.7 & 5.0 & 8.5 \\ \hline \end{array}$$ If an item in Brazil now costs 100 reals, what do you expect it to cost 5 years from now? (Answer to the nearest real.)

Chapter 5

Determine the periodic payments on the loans given: \(\$ 1,000,000\) borrowed at \(4 \%\) for 10 years, with quarterly payments

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