document.write( "<A HREF=/cgi-bin/jump-to-question.mpl?question=1188273>Question 1188273</A>: <I><SPAN STYLE=\"word-break: break-all;\"> A store sells a washing machine.Mark offers to give a down payment of 5,000 pesos and pay 6000 pesos at the end of every 6 months for two years.Assuming that the money compounds by 3% monthly.What is the economic value of the washing machine? </SPAN>\n" );
document.write( "</I><HR><TABLE width=100%><TR><TD><B><A HREF=http://www.algebra.com/>Algebra.Com's</A> Answer #819337 by </B><A HREF=/tutors/aboutme.mpl?userid=Theo><B>Theo(13342)</B></A><img src=\"/images/stars/stars-13.gif\" alt=\"\" >&nbsp;<A HREF=/tutors/aboutme.mpl?userid=Theo><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=Theo><BR>You can <A HREF=\"/cgi-bin/embed-solution.mpl?show=1&solution=819337\">put this solution on YOUR website!</A><BR><SPAN STYLE=\"word-break: break-all;\"> there are two ways to interpret what you just said.\r<BR>\n" );
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document.write( "the money compounds 3% monthly could mean that the interest rate is 3% per month.\r<BR>\n" );
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document.write( "it could also means that the interest rate id 3% per year compounded monthly.\r<BR>\n" );
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document.write( "both options appear to be extreme.\r<BR>\n" );
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document.write( "3% per month equates to 36% per year.\r<BR>\n" );
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document.write( "that's a high annual percent cost.\r<BR>\n" );
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document.write( "3% per year equates to .25% per month.\r<BR>\n" );
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document.write( "that's a low monthly percent cost.\r<BR>\n" );
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document.write( "i'll do it both ways and you can decide which makes more sense for you.\r<BR>\n" );
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document.write( "the calculator at <a  rel=nofollow HREF= \"https://arachnoid.com/finance/index.html\" target = \"_blank\">https://arachnoid.com/finance/index.html</a> was used for my analysis.\r<BR>\n" );
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document.write( "here's the first way.\r<BR>\n" );
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document.write( "the interest rate for each 6 month period is calculated as follows:\r<BR>\n" );
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document.write( ".36 / 12 = .03 per month.<BR>\n" );
document.write( "1.03 ^ 6 - 1 = .1940522965 for each 6 month period.<BR>\n" );
document.write( "multiply that by 100 to get 19.40522965% for each 6 month period.\r<BR>\n" );
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document.write( "here's the second way.\r<BR>\n" );
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document.write( "the interest rate for each 6 month period is calculated as follows:\r<BR>\n" );
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document.write( ".03 / 12 = .0025 per month.<BR>\n" );
document.write( "1.0025^6 - 1 = .0150940632 for each 6 month period.<BR>\n" );
document.write( "multiply that by 100 to get 1.50940632% for each 6 month period.\r<BR>\n" );
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document.write( "here's an excel spreadsheet printout of the 6 month by 6 month remaining balance.\r<BR>\n" );
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document.write( "the first way assumes 36% / 12 = 3% per month.\r<BR>\n" );
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document.write( "the second way assumes 3% per year / 12 = .25% per month.\r<BR>\n" );
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document.write( "there were 4 six month time periods in both cases.\r<BR>\n" );
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document.write( "if it's done the first way, then the economic value of the washing machine would be 5000 + 15709.15 = 20709.15 pesos.\r<BR>\n" );
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document.write( "if it's done the second way, then the economic value of the washing machine would be 5000 + 23120.99 = 28120.99 pesos.\r<BR>\n" );
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document.write( "let me know if you have any questions regarding this.\r<BR>\n" );
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document.write( "theo\r<BR>\n" );
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