SIMPLE

J

JOSH BAR

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Sep 29, 2009
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Excuse my stupidity, but I actually cannot solve this. Am I understanding wrong?

You take out a 8-month, $9,000 loan at 8% simple interest. How much would you owe at the end of the 8 months? (Round your answer to the nearest cent.)
PV = ______ $

The simple interest formula is
INT= PVrt
 
JOSH BAR said:
Excuse my stupidity, but I actually cannot solve this. Am I understanding wrong?

You take out a 8-month, $9,000 loan at 8% simple interest. How much would you owe at the end of the 8 months? (Round your answer to the nearest cent.)
PV = ______ $

The simple interest formula is
INT= PVrt
Click to expand...
PV = 9000
r = 0.08
t = You Tell Me.

Plug-n-chug.

FV = PV + INT

You may wish to review the question. Does it REALLY want PV when PV is provided?
 
That is what I do not understand the PV is 9000 and it was counted wrong, so I am thinking if it means FV? which would 9480 but it is my last submission and I do not want to get it wrong.
 
An 8-year bond costs $30,000 and will pay a total of $2,800 in interest over its lifetime. What is its annual interest rate? (Round the answer to the nearest 0.001%.)
r = ____%

This for example is another problem.

The answer is 0.01666667 or 1.1666667%, how do I submit it in to the nearest 0.001% as it states?
 
JOSH BAR said:
An 8-year bond costs $30,000 and will pay a total of $2,800 in interest over its lifetime. What is its annual interest rate? (Round the answer to the nearest 0.001%.)
r = ____%

This for example is another problem.

The answer is 0.01666667 or 1.1666667%, how do I submit it in to the nearest 0.001% as it states?
Click to expand...

Does not seem to be correct - please show work.
 
I=prt

2800=30000r(8)

2800=240000r

2800/240000=r

=.01166667

So I would multiply times a 100 to get percentage correct?
 
I think you need to consider compound interest here.
 
What would that percentage be rounded to the nearest 0.001% as it states though?
 
An 8-year bond normally pays 16 equal semi-annual coupons.

2800/16 = 175 ==> There's the semi-annual coupon payment.

175/30000 = 0.005833333... ==> There's the semi-annual interest.

Annual Nominal is then 0.00583333... * 2 = 0.01166666.... = 1.1666666...% ==>

Rounded to 1.2% - the near 1/10 of a percent.
Rounded to 1.17% - the near 1/100 of a percent.
Rounded to 1.167% - the near 1/1000 of a percent.

Why are you struggling with rounding? You should have this firmly in your mind. Maybe a dose of calming down would help. You seem to be in panic mode.
 
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