We use cookies to personalise content and advertisements and to analyse access to our website. Furthermore, our partners for online advertising receive pseudonymised information about your use of our website. cookie policy and privacy policy.
 
+0  
 
0
86
2
avatar+108 

Luke is borrowing $10000 from the bank. The bank offers him a choice between two 10-year payment plans:

 Plan 1: Luke's debt accumulates 10% annual interest which compounds quarterly. Luke pays off half his balance after 5 years, and the rest at the end of the 10 years.

 Plan2: Luke's debt accumulates 10% annual interest which compounds annually. Luke pays off his full balance at the end of the 10 years.

What is the (positive) difference between Luke's total payments under Plan 1 and his total payments under Plan 2? Round to the nearest dollar.

 Mar 18, 2019
 #1
avatar+5172 
0

\(r=0.1\\ n_1=4,~n_2=1\\ p=10000\\ \text{plan 1}:\\ payment_{1,1} =\dfrac 1 2 p\left(1+\dfrac{r}{n_1}\right)^{5n_1}\\ payment_{1,2} = payment_{1,1}\left(1+\dfrac{r}{n_1}\right)^{5n_1}\\ p_1 = \text{Plan 1 total payment = }payment_{1,1} + payment_{1,2}\)

 

\(\text{Plan 2}:\\ payment_{2,1} = p\left(1+\dfrac{r}{n_2}\right)^{10 n_2}\\ p_2=\text{Plan 2 total payment = }payment_{2,1}\\ \text{find }|p_2-p_1|\)

.
 Mar 18, 2019
 #2
avatar+108 
0

I am confused.

IneedHALP  Mar 18, 2019

8 Online Users

avatar
avatar