Explanation Given information: It is given that the interest is compounded annually and there are two choices of the payment. $1500 at the start and $3000 at the end of the year. $1900 at the start and $2500 at the end of the year. Calculation: It is given that the interest is compounded annually and there are two choices of the payment. $1500 at the start and $3000 at the end of the year. $1900 at the start and $2500 at the end of the year. Now when the interest rate annually is 5% then below will be net amount for two cases above: Case 1. Let’s suppose A 1 denotes the amount after 1 year so the value of A 1 will be as below: A 1 = 1500 + 5 100 ( 1500 ) + 3000 A 1 = 1500 + 0.05 ( 1500 ) + 3000 [ Simplify ] A 1 = 1500 + 75 + 3000 [ Simplify ] A 1 = 4575 Case 2 To determine (b) To deduce: The interest rate at which the other option is the better one compare to part a using various mathematical methodologies.

6th Edition

ISBN: 9781119399322

Author: Hughes-Hallett

Publisher: WILEY

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Question

Chapter 1.7, Problem 45P

To determine

(a)

To deduce:

Which of the given payment option is the better one using various mathematical methodologies.

To determine

(b)

To deduce:

The interest rate at which the other option is the better one compare to part a using various mathematical methodologies.

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Chapter 1.7, Problem 44P

Chapter 1.7, Problem 46P

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Chapter 1 Solutions

APPLIED CALCULUS (WILEY PLUS)

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(a) To deduce: Which of the given payment option is the better one using various mathematical methodologies.

Solution Summary: The author explains that the interest is compounded annually and there are two choices of the payment.