Calculate The Interest On 17500 At 5.25% For 1 Year

calculate The Interest On 17500 At 525 Simple Interest For 1 Year

Calculate the interest on $17,500 at 5.25% simple interest for 1 year and 5 months.

Calculate the total amount to be repaid on a loan of £19,550 at 6.7% simple interest for 150 days.

Determine the simple interest rate if $12,500 earns $950 over 21 months.

How long will it take to earn $3,300 on a deposit of $17,000 at 7.6% simple interest?

Identify Anita's monthly allowance and her annual university fee payment if she pays 21% of her allowance in university fees, spends 18% on food and drink, and her rent is CHF 1,700 per month, which is 24% of her allowance. She pays fees for 10 months.

Calculate the income yield of an investment in a bond with a coupon of 6.25% priced at 98.4%.

Determine the current sale price of a zero-coupon corporate bond maturing in one year, given that the company pays 2.6% above LIBOR, and 12-month LIBOR is 5.7%.

Calculate the real interest rate when the CPI rises from 147 to 151, and the nominal interest rate is 7.125%.

Calculate the net profit in real terms if you receive $100 interest on a $1,400 deposit after a year, and the inflation rate is 2.2%.

Paper For Above instruction

Introduction

Interest calculations, inflation adjustments, and investment yield assessments are fundamental aspects of financial analysis. Understanding simple interest and its applications enables investors and borrowers to make informed decisions. This paper addresses multiple financial scenarios involving simple interest calculations, investment returns, loan repayment, and real interest rate adjustments, illustrating the key formulas and concepts involved.

Simple Interest Calculations

Simple interest is calculated using the formula I = P × r × t, where I is interest, P is principal, r is annual interest rate, and t is time in years. For the first scenario, the interest on a $17,500 principal at 5.25% for 1 year and 5 months (which is 1.4167 years) is calculated as follows:

I = 17500 × 0.0525 × 1.4167 ≈ $1,312.50.

This indicates that the total interest accrued over 1 year and 5 months is approximately $1,312.50.

Loan Repayment Calculation

To determine the total repayment amount of a loan, both principal and interest are considered. For a £19,550 loan at 6.7% simple interest over 150 days (approximately 0.41096 years), interest is calculated as:

I = 19550 × 0.067 × 0.41096 ≈ £538.49.

Adding interest to the principal gives the total repayment:

Total = 19550 + 538.49 ≈ £20,088.49.

Hence, the borrower is expected to repay approximately £20,088.49 after 150 days.

Interest Rate Determination

The interest rate can be derived from the formula r = I / (P × t). When $12,500 earns $950 over 21 months (1.75 years), the interest rate is:

r = 950 / (12500 × 1.75) ≈ 0.0434 or 4.34% annually.

Time for Investment Returns

To find the time required to earn $3,300 on a $17,000 deposit at 7.6%, rearranged from I = P × r × t, gives:

t = I / (P × r) = 3300 / (17000 × 0.076) ≈ 2.56 years or about 2 years and 7 months.

Analysis of Consumer Expenditure and Allowance

Given that rent is CHF 1,700 which represents 24% of her allowance, her total allowance:

Allowance = 1700 / 0.24 ≈ CHF 7,083.33.

Her university fees are 21% of her allowance:

Fees per year = 7,083.33 × 0.21 × 10 months ≈ CHF 14,875.

Bond Income Yield

The income yield from a bond with a coupon rate of 6.25% priced at 98.4% of face value is:

Income yield = Coupon rate = 6.25%.

However, because of the price, the current yield is:

Current yield = (Coupon payment / Price) = (6.25% of face value) / 98.4% ≈ 6.34%.

Zero Coupon Bond Pricing

The sale price of a zero-coupon bond maturing in one year, paying 100%, which costs 2.6% above LIBOR, with LIBOR at 5.7% is calculated as:

Interest rate = LIBOR + Spread = 5.7% + 2.6% = 8.3%.

Price = Face / (1 + r) = 100 / (1 + 0.083) ≈ $92.37.

Thus, the bond's current price is approximately $92.37.

Real Interest Rate Calculation

The real interest rate can be approximated using the Fisher equation: r_real ≈ r_nominal - inflation rate. If the CPI rises from 147 to 151, the inflation rate is:

Inflation = (151 - 147) / 147 ≈ 2.72%.

Therefore, the real interest rate:

r_real ≈ 7.125% - 2.72% ≈ 4.41%.

Net Profit in Real Terms

The nominal interest earned is $100 on a $1,400 deposit. Adjusting for 2.2% inflation, the real profit:

Real profit = Nominal profit / (1 + inflation) = 100 / 1.022 ≈ $97.84.

Thus, the investor’s real gain in purchasing power is approximately $97.84.

Conclusion

The various financial calculations discussed demonstrate the importance of understanding simple interest, bond yields, inflation adjustments, and loan repayment schedules. These concepts form the foundation for more advanced financial analysis and investment decision-making, emphasizing the significance of precise calculations to assess profitability, risk, and real value.

References

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