at 5% simple intrest find ,the value of today of the following obligations rs 2000 due today rs 3000 due in 6 months ,with interest 6% and rs10000 due in 1 year with interest at 8% ? we today as the focal date
Answers
Answer:
2.1a. Simple and Compound Interest
We have to work with money every day. While balancing your checkbook or calculating your monthly expenditures on espresso requires only arithmetic, when we start saving, planning for retirement, or need a loan, we need more mathematics.
Simple Interest
Discussing interest starts with the principal, or amount your account starts with. This could be a starting investment, or the starting amount of a loan. Interest, in its most simple form, is calculated as a percent of the principal. For example, if you borrowed $100 from a friend and agree to repay it with 5% interest, then the amount of interest you would pay would just be 5% of 100: $100(0.05) = $5. The total amount you would repay would be $105, the original principal plus the interest.
Simple One-time Interest
I = P0r
A = P0 + I = P0 + P0r = P0(1 + r)
I is the interest
A is the end amount: principal plus interest
P0 is the principal (starting amount)
r is the interest rate (in decimal form. Example: 5% = 0.05)
Example 1
A friend asks to borrow $300 and agrees to repay it in 30 days with 3% interest. How much interest will you earn?
The principal
P
0
=
$
300
3% rate
r
=
0.03
You will earn $9 interest
I
=
$
300
(
0.03
)
=
$
9
One-time simple interest is only common for extremely short-term loans. For longer term loans, it is common for interest to be paid on a daily, monthly, quarterly, or annual basis. In that case, interest would be earned regularly. For example, bonds are essentially a loan made to the bond issuer (a company or government) by you, the bond holder. In return for the loan, the issuer agrees to pay interest, often annually. Bonds have a maturity date, at which time the issuer pays back the original bond value.