O EXPONENTIAL AND LOGARITHMIC FUNCTIONSIntroduction to compound interestSuppose that a loan of $2500 is given at an interest rate of 18% compounded each year.Assume that no payments are made on the loan.Follow the instructions below. Do not do any rounding.(a) Find the amount owed at the end of 1 year.(b) Find the amount owed at the end of 2 years.?

Question
Asked Sep 23, 2019

See attached

O EXPONENTIAL AND LOGARITHMIC FUNCTIONS
Introduction to compound interest
Suppose that a loan of $2500 is given at an interest rate of 18% compounded each year.
Assume that no payments are made on the loan.
Follow the instructions below. Do not do any rounding.
(a) Find the amount owed at the end of 1 year.
(b) Find the amount owed at the end of 2 years.
?
help_outline

Image Transcriptionclose

O EXPONENTIAL AND LOGARITHMIC FUNCTIONS Introduction to compound interest Suppose that a loan of $2500 is given at an interest rate of 18% compounded each year. Assume that no payments are made on the loan. Follow the instructions below. Do not do any rounding. (a) Find the amount owed at the end of 1 year. (b) Find the amount owed at the end of 2 years. ?

fullscreen
check_circleExpert Solution
Step 1

We know that,

nt
A PP
help_outline

Image Transcriptionclose

nt A PP

fullscreen
Step 2

Part a

Here, P = $2500, r = 18% = 0.18 and t = 1.

Since, it is compounded annually so n = 1.

0.18 1x1
A 2500 2500(1 +-
1
2500 2500 (1+
0.18
= 25002500(1.18)
- 25002950
= 5450
help_outline

Image Transcriptionclose

0.18 1x1 A 2500 2500(1 +- 1 2500 2500 (1+ 0.18 = 25002500(1.18) - 25002950 = 5450

fullscreen
Step 3

Part b

Here, P = $2500, r = 18% = 0.18 and t = 2.

Sinc...

0.18 1x2
A 2500 2500(1 +'
1
2
2500 2500 (1+
0.18
2500 2500(1.3924)
- 25003481
5981
help_outline

Image Transcriptionclose

0.18 1x2 A 2500 2500(1 +' 1 2 2500 2500 (1+ 0.18 2500 2500(1.3924) - 25003481 5981

fullscreen

Want to see the full answer?

See Solution

Check out a sample Q&A here.

Want to see this answer and more?

Solutions are written by subject experts who are available 24/7. Questions are typically answered within 1 hour*

See Solution
*Response times may vary by subject and question
Tagged in

Math

Calculus

Other