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If You deposit 10000 expected to pay you 2500 annually for 6yrs. Using interest 10% will accept this proposal? Why

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If You deposit 10000 expected to pay you 2500 annually for 6yrs. Using interest 10% will accept this proposal? Why
posted Dec 26, 2018 by Lugano Lovemoi

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1 Answer

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With 10% interest rate (compounding) the 6 equal installments is coming at 2,296$, so if we are getting 2500$ which is way more then 2296 then I should accept the offer.

Formula for installments -
E = P×r×(1 + r)^n/((1 + r)^n - 1)
where
P = 10,000
r = .1
n = 6

answer Dec 27, 2018 by Salil Agrawal



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