You invest $20 at the end of each year for the next 6 years at the...

Question

Question

You invest $20 at the end of each year for the next 6 years at the annual rate of 9%. What percentage of total interest is due to simple interest?

business finance

Answer 1

Answer #1

Total interest = Final amount after 6 years - Initial amount

Total interest = 20*(1.09^6) - 20 = 13.542

Percentage of total interest is due to simple interest = (Total simple interest)*100/Total interest

Percentage of total interest is due to simple interest = (20*6*0.09)*100/13.542 =

Percentage of total interest is due to simple interest = 79.75%

Answer 2

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