• anonymous
Two thousand dollars is borrowed for one year at an interest rate of 1.1% per month. If the same amount of money can be borrowed at an interest rate of 13.2% per year, how much could be saved in interest charges?
Economics - Financial Markets
  • Stacey Warren - Expert
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  • katieb
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  • anonymous
with a monthly compounding interest of 1.1%, total at the end of year will be $2,280.572, Interest Amount = $280.572 with a simple interest of 13.2% per year, total at the end of year will be $2,264.00 Interest Amount = $264.00 Thus, interest diff. = money that could be saved = $16.572. Calculation details: Manual method, I used excel to do below: Month Amount Rate 1 2000 1.011 2 2022 1.011 3 2044.242 1.011 4 2066.729 1.011 5 2089.463 1.011 6 2112.447 1.011 7 2135.684 1.011 8 2159.176 1.011 9 2182.927 1.011 10 2206.939 1.011 11 2231.216 1.011 12 2255.759 1.011 13 2280.572 You can also use the equation at to get at same numbers. Hope this helps. Feel free to revert if you need further explanations!

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