Princessanne63idn
Answered

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1. Suppose that you have a choice of two loans: one at 5% simple interest for 6 years, and

one at 6% simple interest for five years. Which will result in the smaller future value?

Does it depend on the principal?

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Sagot :

KuyaEngridn

In the given problem, apply your knowledge in algebraic expression and basic mathematics especially in solving word problem involving interest of loan.

Given Statement

Suppose that you have a choice of two loans: one at 5% simple interest for 6 years, and one at 6% simple interest for five years.

Mathematical Equation

A = P[1+0.05(t)]

A = P[1+0.05(6)]

A = P(1.3)

A = 1.3P→ for 5%

A = P[1+0.06(t)]

A = P[1+0.06(5)]

A = P(1.3)

A = 1.3P→ for 6%

Which will result in the smaller future value?

Let the principal amount, P = 1000

A = 1.3P→ for 5%

A = 1.3(1000)

A = 1 300

A = 1.3P→ for 6%

A = 1.3(1000)

A = 1 300

Answer: They have the same future value.

Does it depend on the principal?

Yes, it will depend on the principal amount. They will have the same future value if they have the same principal amount.

Learn more about interest including simple and compound interest here at https://brainly.ph/question/11648255

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