# Math Assignment Essay

Math Assignment

For problems 1a) and 1b), a loan company says that it will charge \$0.49 per day for every \$500 borrowed. George borrows \$2000 for 30 days.

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1a) What amount will George repay?

We first compute the interest rate per day.

I = P x r x t , where I= \$0.49, t=1, P=\$500

r= I/(P x t) = .49/(500) = 0.00098 (note: this is daily interest rate)

Then we compute the interest for \$2000

I= P x r x t, where P =2000, r= 0.00098, t=30

I= 2000 x 0.00098 x 30 = \$58.80

Thus, George will pay \$2058.80 in 30 days. (note: subject to rounding off errors)

1b) What annual interest rate is he paying to the company? Assume a 360 day year.

From 1a, the interest per day is \$0.49 for \$500, and then we find the interest rate in 360 days by

r= I/ (P x t) = .49/(500 x 1/360) = .49/ (500 x 0.0028)= .35

Thus, the bank annual interest rate is 35%. (note: subject to rounding off errors)

2)  If \$3400 is deposited into an account earning 6.2% annual interest compounded quarterly, how much will be in the account in 5 years?