1. A regular deposit of $100 is made at the beginning of each year for 20...

60.1K

Verified Solution

Question

Finance

1. A regular deposit of $100 is made at the beginning of eachyear for 20 years. Simple interest is calculated at i%per year forthe 20 years. At the end of the 20-year period, the total interestin the account is $840. Suppose that interest of i% compoundedannually had been paid instead. How much interest would have beenin the account at the end of the 20 years?
2. Herman has agreed to repay a debt by using the followingrepayment schedule. Starting today, he will make $100 payments atthe beginning of each month for the next two-and-a-half years. Hewill then pay nothing for the next two years. Finally, afterfour-and-a-half years, he will make $200 payments at the beginningof each month for one year, which will pay off his debt completely.For the first four-and-a-half years, the interest on the debt is 9%compounded monthly. For the final year, the interest is lowered to8.5% compounded monthly. Find the size of Herman’s debt. Round youranswer to the nearest dollar.

Answer & Explanation Solved by verified expert

4.5 Ratings (640 Votes)

Assume annual interest r ri100 Simple Interest on first deposit 20r100 Simple Interest on Year 2 beginning deposit19r100 Total Simple interest 20r10019r10018r100r100 Total See Answer

Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:

Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!

Become a Member

Transcribed Image Text

1. A regular deposit of $100 is made at the beginning of eachyear for 20 years. Simple interest is calculated at i%per year forthe 20 years. At the end of the 20-year period, the total interestin the account is $840. Suppose that interest of i% compoundedannually had been paid instead. How much interest would have beenin the account at the end of the 20 years?2. Herman has agreed to repay a debt by using the followingrepayment schedule. Starting today, he will make $100 payments atthe beginning of each month for the next two-and-a-half years. Hewill then pay nothing for the next two years. Finally, afterfour-and-a-half years, he will make $200 payments at the beginningof each month for one year, which will pay off his debt completely.For the first four-and-a-half years, the interest on the debt is 9%compounded monthly. For the final year, the interest is lowered to8.5% compounded monthly. Find the size of Herman’s debt. Round youranswer to the nearest dollar.