Videos: Equations of Value and Compound Interest
What is an Equation of Value?
A recap of what we did with simple Interest:
Today, you take out a $5000 loan at 10% compounded quarterly, which is to be repaid with two equal payments at the end of the first year and at the end of the second year.
- Find the size of the payments.
- How much interest will be paid?
You borrowed $3,000 from your line of credit 8 months ago and a further $5,000 three months ago. You arrange with the bank to pay off the line of credit with 2 payments. The first payment, 6 months from today, will be twice as large as the second payment made one year from today. The bank charges you 9% interest, compounded monthly. Suggested focal Date: 6 months from today.
(a) Find the size of each payment.
(b) How much interest did you pay?
Chapter Attribution
Video chapter in Business Mathematics by Chris Kellman, Leslie Major, Don Mallory, Frank Gruen, and Amy Goldlist shared under a CC BY-NC license.
