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Example 3: Suppose you borrow $500 from your friend for 9 months and you agree to an annual interest rate of 12% , what is
Example 3: Suppose you borrow
$500
from your friend for 9 months and you agree to an annual interest rate of
12%
, what is the future value of the loan at the end of 9 months?\ Example 4: If you want to have
$1000
in 6 months, how much would you have to invest at a
8%
rate now to have
$1000
in 6 months?\ Compound interest is where interest for each period is added to the principal before the interest is calculated for the next period.
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