Mr. Doe borrowed $1000 from his bank at 8% per year, compounded annually. He can (i) repay the $1000 together with the interest at the end of 3 years, or (ii) pay the interest at the end of each year and repay the $1000 at the end of 3 years. By how much is (ii) better than (i)?

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A:

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A:

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A: here we can calculate the folowing terms as follow

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A: a.  The amount of cash flows that increases or decreases by a constant amount is called Gradient…

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A:

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A: Nominal interest rate refers to the interest rate before taking inflation into account. Nominal can…

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A: Future Worth of periodic payment is given by F=P/r×1+rn-1 Where P symbolizes the periodic amount, r…

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Q: The interest rate is 15% per year, compounded annually.

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Q: What is the future worth 4 years from now of a present cost of $242,000 to Hydron, Inc., at an…

A: Future value- It is the value of an asset at a particular date in the future.

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A: Simple interest is the total amount that is to be paid for using the borrowed money.

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A: In this scenario, we have to find future value from present value.

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A: The formula to be used here of present worth would be: P=A(1+i)n-1i(1+i)nWhere i is the annual…

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Q: wants to deposit an amount P now such that she can withdraw an equal annual amount of A1 = $2000 per…

A: * SOLUTION :-

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A: Here, we calculate the given as follow;