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Question 934662: 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
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?
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:
A)17% per annum simple interest
B)14% per annum compounded interest
Answer by AlgebraLady88(44)   (Show Source):
You can put this solution on YOUR website! 1)James pays $400/month. At the end of the year, his rent will increase 20 %.
20% of 400 is 20/100*400= 80
Therefore , the rent increase is $80. His new rent at the end of the year would be $400+$80=$480/month.
2)Here, we will need the compound interest formula, but with a twist,
FV= PV( 1+ r/k)^(nk)
FV= future value
PV= principal value
r= interest
k= number of compounding periods in one year
nk= number of compounding periods multiplied by number of years.
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
So, to fill in the formula, we have
FV= PV(1+ r/12)^(nk)
FV= 2000 (1+ 0.21/12)^ 12*7
FV= 2000 (1+ 0.0175)^ 84
FV= 2000 (1.0175)^84
FV= 8588.5747
FV= 8588.57
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:
A)17% per annum simple interest
B)14% per annum compounded interest
A) For simple interest, the formula would be I= Prt
I= Interest, P= principal r=rate of interest t= time
I= prt
I= 8500 * 0.17 * 3
I= 4335
So, after 3 years, they pay back 8500 + 4335 = $12 835!
B)FV= PV(1+ r/1)^(nk)
FV= 8500 (1+ 0.14/1)^(1*3)
FV= 8500 (1.14)^3
FV= 12593.124
FV= 12593.12
So, after 3 years, they pay back $12 593. 12 !
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