1.Find the interest rate on a loan charging $810 simple interest on a principal of $3750...

1.Find the interest rate on a loan charging $810 simple interest on a principal of $3750 after 6 years.

2.Find the term of the compound interest loan. (Round your answer to two decimal places.)

4.9% compounded quarterly to obtain $8600 from a principal of $2000.

Solutions

Expert Solution

1)Interest per year 810/6= 135

Simple interest = Amount * Rate*Time

135 = 3750 *r * 1

135 = 3750*r

r = 135/3750

= .036 or 3.6%

2) Quarterly rate = 4.9/4 = 1.225% [4 quarters in a year]

Term (number of quarters) = IN[Future value/present value]/IN(1+r)

= IN[8600/2000]/IN[1+.01225]

= IN 4.3/ IN 1.01225

= 1.45862/ .012176

= 119.79468

Number of years =119.79468 / 4

= 29.95 years

Term : 29.95

jeff jeffy answered 1 year ago

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