Question 1: 1680(.12)(1/4) ; OK?
Question 2: 12 months = .15 ; 10 months = .15 / 12 * 10 = .125
13500 / 1.125 = 12000
I have 2 similar application problems that I can't seem to figure out...
1) A firm buys 12 file cabinets at $140 each, with the bill due in 90 days. How much must the firm deposit now to have enough to pay the bill if money is worth 12% per year? Use 360 days in a year.
and
2) If you want to earn 15% annual simple interest on an investment, how much should you pay for a note that will be worth $13,500 in 10 months?
The answer for #1 (back of the book) is $1,631.07 and the answer for #2 is $12,000.
For question 1, I'm coming up with $1,612.80 by using the formula: I=prt, which comes out to 1680(0.12)(1/3)
For question 2, I am completely clueless as to how to even begin this problem!
For question 1, using 1680(.12)(1/4), I'm getting 50.4. I'm not able to figure out how using that calculation which results in 50.4 leads to the answer (1,631.07).
For question 2, how did you get 1.125 for 10 months? Your calculation is correct and matches with the answer in the book, but I'm just wondering how you came up with 1.125. Thanks!