4 Alan planned to invest $8500 in a term deposit. He had two investment plans from which to choose. Plan 1: Simple interest at 5% per annum Plan 2: Compound interest at 5% per annum, calculated on the increasing balance and added to the account every month a Calculate the total interest earned by Alan if he invested his money using Plan 1 for one year. b Calculate, to the nearest cent, the total interest earned by Alan if he invested his money using Plan 2 for one year. с Calculate the simple interest rate that would provide the same total interest as earned under Plan 2 for an investment of $8500 for one year. Give your answer correct to two decimal places. d Determine the number of years it would take for the investment to double if it is invested under Plan 1. e Alan discovered another investment plan. Under this plan, an investment would double in exactly nine years. Calculate the annual simple interest rate of this investment plan, correct to one decimal place.
4 Alan planned to invest $8500 in a term deposit. He had two investment plans from which to choose. Plan 1: Simple interest at 5% per annum Plan 2: Compound interest at 5% per annum, calculated on the increasing balance and added to the account every month a Calculate the total interest earned by Alan if he invested his money using Plan 1 for one year. b Calculate, to the nearest cent, the total interest earned by Alan if he invested his money using Plan 2 for one year. с Calculate the simple interest rate that would provide the same total interest as earned under Plan 2 for an investment of $8500 for one year. Give your answer correct to two decimal places. d Determine the number of years it would take for the investment to double if it is invested under Plan 1. e Alan discovered another investment plan. Under this plan, an investment would double in exactly nine years. Calculate the annual simple interest rate of this investment plan, correct to one decimal place.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Alan planned to invest $8500 in a term deposit. He had two investment plans
from which to choose.
Plan 1: Simple interest at 5% per annum
Plan 2: Compound interest at 5% per annum, calculated on the increasing balance
and added to the account every month
a
Calculate the total interest earned by Alan if he invested his money using
Plan 1 for one year.
b
Calculate, to the nearest cent, the total interest earned by Alan if he invested
money using Plan 2 for one year.
his
с
Calculate the simple interest rate that would provide the same total interest
as earned under Plan 2 for an investment of $8500 for one year. Give your
answer correct to two decimal places.
d
Determine the number of years it would take for the investment to double if
it is invested under Plan 1.
e
Alan discovered another investment plan. Under this plan, an investment
would double in exactly nine years. Calculate the annual simple interest rate
of this investment plan, correct to one decimal place.
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