document.write( "<A HREF=/cgi-bin/jump-to-question.mpl?question=934662>Question 934662</A>: <I><SPAN STYLE=\"word-break: break-all;\"> 1.James pays a rent of 400 every month.At the end of the year he will have a rent increase of 20% .Calculate the new rent increase he will have to pay<BR>\n" );
document.write( "2.James has saved R2000 and wants to invest the money in a fixed deposit account.he will earn 21% interest compounded monthly.How much money will he have after 7 years?<BR>\n" );
document.write( "3 The Zondo family uses a loan of R8500.They repay the loan in one amount at the end of 3 years.How much money would the Zondos need to repay the loan if the interest is:<BR>\n" );
document.write( "A)17% per annum simple interest<BR>\n" );
document.write( "B)14% per annum compounded interest </SPAN>\n" );
document.write( "</I><HR><TABLE width=100%><TR><TD><B><A HREF=http://www.algebra.com/>Algebra.Com's</A> Answer #567742 by </B><A HREF=/tutors/aboutme.mpl?userid=AlgebraLady88><B>AlgebraLady88(44)</B></A><img src=\"/images/stars/stars-07.gif\" alt=\"\" >&nbsp;<A HREF=/tutors/aboutme.mpl?userid=AlgebraLady88><IMG SRC=http://www.algebra.com/images/aboutme-small.gif BORDER=0 alt=\"About Me\" VALIGN=MIDDLE></A>&nbsp;<IMG SRC=http://www.algebra.com/cgi-bin/show-face.mpl?user=AlgebraLady88><BR>You can <A HREF=\"/cgi-bin/embed-solution.mpl?show=1&solution=567742\">put this solution on YOUR website!</A><BR><SPAN STYLE=\"word-break: break-all;\"> 1)James pays $400/month. At the end of the year, his rent will increase 20 %.\r<BR>\n" );
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document.write( "20% of 400 is 20/100*400= 80<BR>\n" );
document.write( "Therefore , the rent increase is $80. His new rent at the end of the year would be $400+$80=$480/month. \r<BR>\n" );
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document.write( "2)Here, we will need the compound interest formula, but with a twist, <BR>\n" );
document.write( "               FV= PV( 1+ r/k)^(nk)\r<BR>\n" );
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document.write( "FV= future value<BR>\n" );
document.write( "PV= principal value<BR>\n" );
document.write( "r=  interest<BR>\n" );
document.write( "k=  number of compounding periods in one year<BR>\n" );
document.write( "nk= number of compounding periods multiplied by number of years.\r<BR>\n" );
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document.write( "Why does the interest have to be divided by 12? This is because the interest is 21% compounded monthly, so it really is 21%/12 as there are 12 months in a year.If it was compounded annually, k= 1, compounded quarterly, k= 4 and compounded daily k= 365\r<BR>\n" );
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document.write( "So, to fill in the formula, we have\r<BR>\n" );
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document.write( "FV=  PV(1+ r/12)^(nk)<BR>\n" );
document.write( "FV=  2000 (1+ 0.21/12)^ 12*7<BR>\n" );
document.write( "FV=  2000 (1+ 0.0175)^ 84<BR>\n" );
document.write( "FV=  2000 (1.0175)^84<BR>\n" );
document.write( "FV=  8588.5747<BR>\n" );
document.write( "FV=  8588.57\r<BR>\n" );
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document.write( "3) The Zondo family uses a loan of R8500.They repay the loan in one amount at the end of 3 years.How much money would the Zondos need to repay the loan if the interest is:<BR>\n" );
document.write( "A)17% per annum simple interest<BR>\n" );
document.write( "B)14% per annum compounded interest\r<BR>\n" );
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document.write( "A) For simple interest, the formula would be I= Prt<BR>\n" );
document.write( "   I= Interest, P= principal r=rate of interest t= time\r<BR>\n" );
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document.write( "I= prt<BR>\n" );
document.write( "I= 8500 * 0.17 * 3<BR>\n" );
document.write( "I= 4335<BR>\n" );
document.write( "So, after 3 years, they pay back 8500 + 4335 = $12 835!\r<BR>\n" );
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document.write( "B)FV=  PV(1+ r/1)^(nk)<BR>\n" );
document.write( "  FV=  8500 (1+ 0.14/1)^(1*3)<BR>\n" );
document.write( "  FV=  8500 (1.14)^3<BR>\n" );
document.write( "  FV=  12593.124<BR>\n" );
document.write( "  FV=  12593.12\r<BR>\n" );
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document.write( "So, after 3 years, they pay back $12 593. 12 ! </SPAN>\n" );
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