Problem 9-6A Comparison of Simple and Compound Interest On June 30, 2014, Rolloff Inc. borrowed...1 answer below »

Problem 9-6A Comparison of Simple and Compound Interest

On June 30, 2014, Rolloff Inc. borrowed $25,000 from its bank, signing a 6% note. Principal and interest are due at the end of two years.

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(Continued )

Required

1. Assuming that the note earns simple interest for the bank, calculate the amount of interest accrued on each of the following dates:

December 31, 2014

December 31, 2015

June 30, 2016

2. Assume instead that the note earns 6% for the bank but is compounded semiannually. Calcu- late the amount of interest accrued on the same dates as in part (1).

3. How much additional interest expense will Rolloff have to pay with semiannual interest?

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Nov 17 2020 11:07 PM

1 Approved Answer

VIJAYAKUMAR G
answered on
November 19, 2020

5
Ratings,(6 Votes)

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Simple and compound interest difference

Problem 9-6A Comparison of Simple and Compound Interest

On June 30, 2014, Rolloff Inc. borrowed $25,000 from its bank, signing a 6% note. Principal and interest are due at the end of two years.

Solution

rate

$

Terms

Jun 30,2014

Amount Borrowed by notes

25,000

Annual interest rate

6%

Principal and interest are due at the end of two years.

Required

1. Assuming that the note earns simple interest for the bank, calculate the amount of interest accrued on each of the following dates:

Assuming that the note earns simple interest for the bank,

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