7. An investor has a choice of investing a sum of money using two investment plans. For Plan 1, he invests his money at 4% compounded annually; for Plan 2, he invests his money at 3.75% semi-annually. a. Which of the two plans is more favorable to the investor? b. If the investor chooses Plan 1, after how many years will the initial sum be increased by 50%? c. Suppose that the investor starts with an initial sum of € 30 000 and that he follows Plan 1. Write down a function equation to calculate the one-year interest earned at the end of year t.
7. An investor has a choice of investing a sum of money using two investment plans. For Plan 1, he invests his money at 4% compounded annually; for Plan 2, he invests his money at 3.75% semi-annually. a. Which of the two plans is more favorable to the investor? b. If the investor chooses Plan 1, after how many years will the initial sum be increased by 50%? c. Suppose that the investor starts with an initial sum of € 30 000 and that he follows Plan 1. Write down a function equation to calculate the one-year interest earned at the end of year t.
Chapter9: Sequences, Probability And Counting Theory
Section9.4: Series And Their Notations
Problem 56SE: To get the best loan rates available, the Riches want to save enough money to place 20% down on a...
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Transcribed Image Text:7. An investor has a choice of investing a sum of money using two investment plans. For Plan 1, he invests
his money at 4% compounded annually; for Plan 2, he invests his money at 3.75% semi-annually.
a. Which of the two plans is more favorable to the investor?
b. If the investor chooses Plan 1, after how many years will the initial sum be increased by 50%?
c. Suppose that the investor starts with an initial sum of € 30 000 and that he follows Plan 1. Write
down a function equation to calculate the one-year interest earned at the end of year t.
For the subsequent questions, suppose the investor follows a plan to invest € 10 000, such that the
interest function at the end of year t is given by I(t) = 10 000-0.076-1.076-1. Every year the investor
has to pay taxes on the interest he earns. If the interest is lower than € 1660, no taxes have to be paid.
On the amount of interest that exceeds € 1660, 15% taxes is due.
d. For how many years does the investor pay no taxes?
e. After how many years will the tax be bigger than€ 100?
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