SOLUTION: To buy a laptop computer, Aline wants to borrow $2000 for 3 years. She lives near two banks.
The first bank offers the amount with a 5% simple interest rate.
1. How much interest
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The first bank offers the amount with a 5% simple interest rate.
1. How much interest
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Question 1159784: To buy a laptop computer, Aline wants to borrow $2000 for 3 years. She lives near two banks.
The first bank offers the amount with a 5% simple interest rate.
1. How much interest will she pay at the end of the third year at an annual simple interest
rate of 5%?
2. Compute the future value.
The second bank offer the amount with a 6% interest rate compounded annually.
3. How much will Aline pay at the end of the third year?
4. Which offer is better? Justify. Answer by Boreal(15235) (Show Source):
You can put this solution on YOUR website! simple interest is I=prt or 2000*0.05*3=$300 interest and payback of $2300 needed
second is 2000(1+.06)^3
=$2382.03 needed to pay it back
the first is because it is 5% and not 6% just to start and it isn't compounding, which means one is not paying interest on the interest.
