Simples Interest calculation
Simples Interest calculation
Name
Affiliation
Question 1
Arabian Autos: The best way to ensure that the rates of the sale of company is calculated in the best way is using simple interest
Discount = 7000
Principles price= 89,000
Rate=3%
Time is= 5 years
I=P* R*T/100
I= 89,000*0.03*5
Interest = 13350
Amount payable =I+ Principles
Amount payables= 13350+89000
Amount = 102,350
It is noted that the First Company which is Arabian Auto is selling the car at 96,000 and the second company which is Alfuttaim Motors sells at 102,350. This means that Arabian Auto is selling at the best Rate possible.
Question 2
The type of interest rate is Floating interest rate. A floating interest rate, otherwise called a variable or movable rate, alludes to any kind of obligation instrument, for example, a credit, security, home loan, or credit, that does not have an altered rate of enthusiasm over the life of the instrument. Such obligation commonly utilizes a list or other base rate for making the investment rate for every applicable period. A standout amongst the most widely recognized rates to use as the premise for applying premium rates is the London Inter-bank Offered Rate, or LIBOR (the rates at which substantial banks loan to one another). The rate for such obligation will typically be alluded to as a spread or edge over the base rate: for instance, a five-year credit may be evaluated at six-month LIBOR + 2.50%. Toward the end of every six-month period, the rate for the accompanying period will be focused around LIBOR by then (the reset date), in addition to the spread. This doubles the simple interest rates of the companies.
References
Eggertsson, G. B. (2011). What fiscal policy is effective at zero interest rates?. In NBER Macroeconomics Annual 2010, Volume 25 (pp. 59-112). University of Chicago Press.
