00:01
Eric cobb borrowed from frank cronin 5 .2 at a simple interest rate of 7 % for a period of 10 months.
00:18
The question is, after he had reinvested that amount or what he received after 10 months into a 5 -year deposit certificate, how much will the proceeds be at the end? so the first step is to identify that this is a two -period calculation.
00:45
The first one is the 10 months with an interest of 7 % symbol.
00:58
And the following one would have an interest of 6 .3 % per quarter, and the period will be 5 years.
01:07
Now, the principle for the 5 -year period is the proceeds for the 10 -month investment into eric corp.
01:22
So the simple interest rate, a, is equal to p1 plus i .n.
01:31
And this will be 5 .2, 1 plus interest, 0 .07 times 10 months, period would be 10 over 12.
01:55
And then this would give us, let's see what we'll get, 5 .2, 1 plus 0 .07 times 10 divided by 12, and we'll get 550, and we'll get 5503 .3 recurring.
02:21
So you will receive 5503 .33...