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Formal Symbolic Logic - Information Technology Services正式的符号逻辑的信息技术服务
Simple Interest Introducing the Mathematics of Finance Notes about Simple Interest 3 months of interest 3 months of interest Simple Interest Formula 18 month investment Investing today Present Value Now and Later Examples Find the simple interest rate Time to double? * * For a short-term loan (perhaps a loan to a friend), simple interest may be used. For simple interest, the interest is determined just once, at the end of the loan. Later, we’ll study compound interest where the interest is applied at regular periods. Suppose you make a loan of $2000 for which you charge 8% annually in simple interest. If the loan is repaid at the end of 3 months, how much interest should you be paid? If the rate is 8%, the interest is 8% of $2000 per year. A total of ($2000)(0.08) = $160 interest for one year. But since the loan was for just 3 months or 3/12 of a year, you are paid this fraction of the yearly interest. The interest paid is ($2000)(0.08)(3/12) = $40.00 For a loan of P dollars at a simple interest rate r, the interest I is given by where t is the duration (in years) of the loan. The total amount A due at the end of the loan is dollars borrowed + interest charged Suppose a short-term investment offers 10% simple interest. If you invest $4000 in such an account, what is the value of the investment 18 months later? The interest earned is Prt = ($4000)(0.10)(18/12) = $600. And so, the total value of the investment is A = P + Prt = $4000 + 600 = $4600. Again, suppose a short-term investment offers 10% simple interest. How much should be invested in the account today in order for the account to have a future value of $7500 at the end of 18 months? Here, we’re asked to find the initial amount P. And so, we note the “present value” of the account. To have a future value of $7500 at the end of 18 months, is the amount we need to invest today. Note the parentheses! Initial amount or principal, P “present value” Accumulated total value, A “future va
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