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Find the rate of interest if compound amount factor compounded bi-monthly for 5 years is equal to 1
Find the rate of interest if compound amount factor compounded bi-monthly for 5 years is equal to 1.487887. • A.7% • B. 5% • C. 8% • D.6% 2. Compute the nominal rate for a period of 6 years for an effective rate of 8.33% if it is compounded continuously. • A. 7% • B. 5% • C. 8% • D.6% 3. A man loan P2000 from the bank. How long would it take in years for the amount ofthe loan and interest to equal P3280 if it was made at 8% simple interest. • A. 7 years • B. 5 years • C. 8 years • D. 6 years 4. A man loan P2000 from the bank. How long would it take in years if it was made at8% compounded quarterly. A. 5.25 years B. 7.25 years • C. 6.25 years • D. 8.25 years
Expert Solution
1 The correct answer is 8%1+i)n = compound factor(1+i)6 = 1.487887since i is bimonthly,(1+i6)6*5 = 1.4878871+i6= 1.4878871/30i6=1.01333334 −1i = 0.01333334 *6=8%
Answer 3
3 the correct answer is 8 year
Given,
A man loan p2000 from the bank, so here principal amount=p2000
8% simple interest, so the rate of interest (R)=8%
The amount to be paid at the end is p3280, so the total simple interest would be p3280−p2000=p1280p3280-p2000=p1280.
Step 2
We know the formula to find the simple interest is
I=P×T×R100I=P×T×R100 where P=principal, I=simple interest, T=time, and R= rate of interest.
Putting the given data on the formula:
I=P×T×R100⇒p1280=p2000×T×8100⇒T=p1280×100p2000×8⇒T=8I=P×T×R100⇒p1280=p2000×T×8100⇒T=p1280×100p2000×8⇒T=8
Answer:
Hence, it would take 8 years to pay the amount p3280.
4 the correct answer is 6.25 year
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