Question
Simple versus Compound Interest For each of the following notes, calculate the simple interest due at the end of the term. Note Face Value (Principal)
Simple versus Compound Interest
For each of the following notes, calculate the simple interest due at the end of the term.
Note | Face Value (Principal) | Rate | Term |
1 | $24,600 | 4% | 6 Years |
2 | 24,600 | 6% | 4 Years |
3 | 24,600 | 8% | 3 Years |
Use the appropriate present or future value table:
FV of $1, PV of $1, FV of Annuity of $1 and PV of Annuity of $1
Round your calculations to nearest dollar.
Simple Interest | |
Note 1 | $ |
Note 2 | $ |
Note 3 | $ |
Now assume that the interest on the notes is compounded annually. Calculate the amount of interest due at the end of the term for each note. When using the Present Value and Future Value tables be sure to use all the digits shown. If required, round your answers to nearest dollar.
Interest | |
Note 1 | $ |
Note 2 | $ |
Note 3 | $ |
Finally, assume that the interest on the notes is compounded semiannually. Calculate the amount of interest due at the end of the term for each note. When using the Present Value and Future Value tables be sure to use all the digits shown. If required, round your answers to nearest dollar.
Interest | |
Note 1 | $ |
Note 2 | $ |
Note 3 | $ |
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