Question

Need help on these questions!1. Find the balance in the same account: $3,000 principal, earning 3% compounding annually, after 4 years.

2. Find the balance in the same account: $2,000 principal, earning 7% compounding semi-annually, after 25 years.

3. A tractor costs $14,340 and depreciates in value by 15% per year. How much will the tractor be worth after 3 years?

Answer 1

1. Using the compound interest formula: A = P(1 + r/n)^(n*t)

where A is the balance, P is the principal, r is the annual interest rate,

n is the number of times the interest is compounded per year, and t is the

number of years.

A = 3000(1 + 0.03/1)^(1*4) = $3,370.59

Therefore, the balance after 4 years is $3,370.59.

2. Using the compound interest formula: A = P(1 + r/n)^(n*t)

where A is the balance, P is the principal, r is the annual interest rate,

n is the number of times the interest is compounded per year, and t is the

number of years.

r = 7% per year, compounded semi-annually

n = 2 (twice a year)

t = 25 years

A = 2000(1 + 0.07/2)^(2*25) = $19,077.23

Therefore, the balance after 25 years is $19,077.23.

3. After the first year, the tractor will be worth:

$14,340 - 0.15*$14,340 = $12,189

After the second year:

$12,189 - 0.15*$12,189 = $10,361.65

After the third year:

$10,361.65 - 0.15*$10,361.65 = $8,807.40

Therefore, the tractor will be worth $8,807.40 after 3 years.