1 The amount of money that must be loaned at six percent sim

1. The amount of money that must be loaned at six percent simple interest per year to earn $47 in interest in two years is closest to:

2. The annual expenditure over a ten-year period that is equivalent to spending $1,000 at the end of the first year, $2,000 at the end of the fourth year, and $3,000 at the end of the eighth year if the interest rate is 8% per year is closest to:

Solution

1. Let the principle amount that is loaned is denoted by P.

Simple interest, r = 6? = 0.06

Time period, T = 2 years

Simple interest = PrT = $47

Or, P * 0.06 * 2 = $47

Or, P * 0.12 = $47

Or, P = $(47 / 0.12) = $391.67

The amount of money that must be loaned is $391.67