2. Adam borrows $6,000 from his parents today for university fees and he promises to pay a lump sum of $6,900 in 3 years' time. Calculate the following quantities
for the repayment arrangement:
(a) the effective annual interest rate.
(b) the equivalent simple annual interest rate.

A) 4.77%.

B) 5%.

Step-by-step explanation:

Given that Adam borrows $ 6,000 from his parents today for university fees and he promises to pay a lump sum of $ 6,900 in 3 years' time, to calculate the effective annual interest rate and the equivalent simple annual interest rate the following calculations must be performed:

A)

6,900 = 6,000 x (1 + X / 1) ^ 3x1

6,900 = 6,000 x 1X ^ 3

6,900 = 6,000 x 1 x 4.77 ^ 3

Thus, the interest rate of said investment is 4.77% per year.

B)

(6,900 - 6,000) / 3 = 300

6,000 = 100

300 = X

300 x 100 / 6,000 = X

30000 / 6,000 = X

5 = X

Thus, the simple interest rate would be 5% per year.

options a,b,c are the right answer.

step-by-step explanation:

a linear parent function is always represented as y = x

if we write this function in the form of y=mx+c

⇒

or  

now if we plot a graph we will find these characteristics:

1) y intercept of the graph is zero so its a straight line passing through origin.

2) as we can see in both the forms of function written, values of x and y may be either positive or negative for the positive slope means points on the graph are either in first quadrant or in third one.

3) it's slope is one.

irrational, cannot