an individual has purchased 275000 worth of savings certificates. Certificates expires in 25 years and a simple interest rate is computed quarterly at 3%per quarter. Interest checques are mailed to certificates holders ever 3 months. The interest the individual can expext to earn every 3 months is:
4 answers
I = Po*r*t = 275,000*0.03*1 = $8,250.
how to possible n=1?
2062.5 Rs
Interest = Principal * Rate * Time
Here's how you can apply the formula to this scenario:
1. Determine the principal amount: The individual has purchased savings certificates worth $275,000.
2. Determine the interest rate per quarter: The given interest rate is 3% per quarter.
3. Convert the rate into a decimal: Divide the given rate by 100 to get it in decimal form. In this case, 3% as a decimal is 0.03.
4. Determine the time period in years: The certificates expire in 25 years. Since the interest is computed every quarter (3 months), we need to convert the time into quarters.
25 years * 4 quarters per year = 100 quarters
5. Apply the formula:
Interest = Principal * Rate * Time
Now we have to find interest on only one quarters(3 months) so we put n =1
Then,
Interest=275000*0.03*1
Interest=8250
Here's how you can apply the formula to this scenario:
1. Determine the principal amount: The individual has purchased savings certificates worth $275,000.
2. Determine the interest rate per quarter: The given interest rate is 3% per quarter.
3. Convert the rate into a decimal: Divide the given rate by 100 to get it in decimal form. In this case, 3% as a decimal is 0.03.
4. Determine the time period in years: The certificates expire in 25 years. Since the interest is computed every quarter (3 months), we need to convert the time into quarters.
25 years * 4 quarters per year = 100 quarters
5. Apply the formula:
Interest = Principal * Rate * Time
Now we have to find interest on only one quarters(3 months) so we put n =1
Then,
Interest=275000*0.03*1
Interest=8250
1 answer