Susan needs to borrow 15000 dollars She has 3 options to cho

Susan needs to borrow $15,000 dollars. She has 3 options to choose from: 5.5% simple interest for 4 years 5.25% interest compounded monthly for 4 years 5% interest compounded continuously for 4 years. How much total interest would Susan pay for each option?. Which option would be best for Susan, assuming she wants to pay the least amount of interest possible. A veterinarian depreciates a $10,000 X-ray machine. He estimates that the resale value

Solution

Principla ,P = $15,000

7

a ) 5.5% simple interest:

S.I = P*rate*time/100 = 15000*5.5*4/100

=$3300

b) 5.25% interest compounded monthly for 4 years

Amount = P( 1 +r/12*100)^(12*4)

= 15000( 1 +0.0525/12)^48

= $18496.70

Interest = $18496.70 -$15000 = $3496.70

c) 5% interest compounded continously for 4years

Amount = Pe^(r*t)

= 15000e^(0.05*4)

= $18315

Interest =  $18315 - $15000 = $3315

b) Option of 5.5% simple interest for 4 years is best as she has to pay least interest