Question

In: Finance

7. Suppose that you are planning to take a four-year loan of $200,000 for your program....

7. Suppose that you are planning to take a four-year loan of $200,000 for your program. The interest rate of this loan is 7% and its compounds annually. What would be the amount of interest?

8. Assume that a $50,000 investment is held for five years in a savings account with 5% simple interest paid annually. What is the future value of such investment?

Solutions

Expert Solution

Q7
Time Opening Balance Interest Closing Balance
                                                              1.00             200,000.00       14,000.00               214,000.00
                                                              2.00             214,000.00       14,980.00               228,980.00
                                                              3.00             228,980.00       16,028.60               245,008.60
                                                              4.00             245,008.60       17,150.60               262,159.20
Total Amount of interest over 4 years       62,159.20
Q8
Amount of investment                50,000.00
Simple Interest 5%
Amount of interest per year                  2,500.00
Interest for 5 years = 2500*5                12,500.00
Future Value of investment = 50,000 + 12,500                62,500.00

jeff jeffy answered 1 year ago
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