1. beth invests $4,200 at an annually compunded interest rate of 6%. Josey invests $4,200 at a simple interest rate of r%

a.What is r if their investments are worth the same amount after 1 year?

b.What is r if their investments are worth the same amount after 2 years?

c.What is r if their investments are worth the same amount after 10 years?

Leaded Aug 3, 2020

#1**0 **

FV = PV * [1 + R]^N, where FV = Future Value, PV = Present Value, R =Interest Rate, N = No. of Periods.

FV = 4200 * 1.06^1 =$4,452.00 - value of the investment after 1 year.

r =4,452 / 4200 =1.06 - 1 x 100 =6% - value of r after 1 year.

FV = 4200 * 1.06^2 =$4,719.12 - value of the investment after 2 years.

r =4,719.12 / 4,200 =1.1236 - 1 =[0.1236 / 2] x 100 = 6.18% - value of r after 2 years.

FV =4200 * 1.06^10 =$7,521.56 - value of the investment after 10 years.

r =7,521.56 / 4,200 =1.7908477 - 1 =[0.7908477 / 10] x 100 =7.91% - value of r after 10 years.

Guest Aug 3, 2020