Jolo holds a P32,000 simple interest note at 12%, which is payable at the end of a year, from Cecilia. If Jolo decides
Posted: Sat Feb 26, 2022 11:41 am
Jolo holds a P32,000 simple interest note at 12%, which is payable at the end of a year, from Cecilia. If Jolo decides to sell the note 5 months after the origin date, how much will he receive if the discount interest rate is 14%?
Below is the answer previously provided.
After solving for the Future value, why is the formula for compound interest used instead of the typical process where the discount period (period between maturity date and discount date) is computed and the formula for proceeds (P_r = F - I_d) is used?
How did the formula for a compound interest become applicable to a problem of simple interest note?
Thank you!!
1) Why is the discount period and proceeds not solved?
2) Why is the formula for compunt interest used for this simple interest question?
S Saurabh Answer-1) Final value of the note at 12.5% simple interest = 32,000 * 1.12 35,840 = Present value of $35,840 at discount interest rate of 14% =$35,840 / 1.14 = $31,438.60 Monthly interest = 0.14 / 12 = 0.0117 Final value of the $32,115 in 5 months = (1.0117)^5 * $31,438.60 = $33,321.30 As per policy we have to answer first question. Please re- upload the remaining questions separately.
Below is the answer previously provided.
After solving for the Future value, why is the formula for compound interest used instead of the typical process where the discount period (period between maturity date and discount date) is computed and the formula for proceeds (P_r = F - I_d) is used?
How did the formula for a compound interest become applicable to a problem of simple interest note?
Thank you!!
- Jolo Holds A P32 000 Simple Interest Note At 12 Which Is Payable At The End Of A Year From Cecilia If Jolo Decides 1 (75.83 KiB) Viewed 62 times
2) Why is the formula for compunt interest used for this simple interest question?
S Saurabh Answer-1) Final value of the note at 12.5% simple interest = 32,000 * 1.12 35,840 = Present value of $35,840 at discount interest rate of 14% =$35,840 / 1.14 = $31,438.60 Monthly interest = 0.14 / 12 = 0.0117 Final value of the $32,115 in 5 months = (1.0117)^5 * $31,438.60 = $33,321.30 As per policy we have to answer first question. Please re- upload the remaining questions separately.