00:01
So in part a, we have that the interest rate is 5 % per year.
00:07
So we have choice one is basically $1 ,500 now and $3 ,000 a year later.
00:14
So at the end of year one, we have 1500 times 1 plus 5 over 100.
00:21
That's the interest of 5 % contributing to it.
00:26
And then we have plus 3 ,000.
00:29
That's what we have at the end of 5%.
00:31
Year 1 and at the end of k years for key credit than 1 we have this this whole thing multiplied by 1 plus 5 over 100 raised to the 4 k minus 1 so that is 1500 times 1 plus 5 over 100 plus 3 ,000 that's what we have at the end of year 1 and then we have further 1 plus 5 over 100 raised to the 4 k minus 1 for the remaining k minus 1 years at 5 % to get what we have at the end of k years.
01:05
So this is the entire thing that we have at the end of k years 4k credit than one remember.
01:11
Because the first year is just this.
01:14
So in any case, this is equal to 4575 times 1 plus 5 over 100 raised to the power k minus 1.
01:25
And for choice 2, we have $1 ,900 now and $2 ,500 a year later.
01:33
So at the end of year k, for k greater than 1, we have 1900 times 1 plus 5 over 100 plus 2 ,500...