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2 years ago

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James wants to invest $12,000. He can invest the money at 7.2% simple interest for 30 yr or he can invest at 6.8% with interest

compounded continuously for 30 yr. Which option results in more total interest?
7.2% simple interest results in more total interest
6.8% compounded continuously results in more total interest

1 answer:

Sever21 [200]2 years ago

4 0

Over time, compound interest at any rate will outperform simple interest. When the rates are nearly equal to start with, compound interest will be greater in very short order. Here, it takes less than 1 year for compound interest to give a larger account balance.

In 30 years, the simple interest will be

... I = P·r·t = 12,000·0.07·30 = 25,200

In 30 years, the compound interest will be

... I = P·(e^(rt) -1) = 12,000·(e^(.068·30) -1) ≈ 80,287.31

_____

6.8% compounded continuously results in more total interest

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A store sells 8 colors of balloons with at least 28 of each color. How many different combinations of 28 balloons can be chosen?

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Answer:

(a) $Selection = 6724520$

(b) $At\ most\ 12 = 6553976$

(c) $At\ most\ 8 = 6066720$

(d) $At\ most\ 12\ red\ and\ at\ most\ 8\ blue = 5896638$

Step-by-step explanation:

Given

$Colors = 8$

$Balloons = 28$ --- at least

Solving (a): 28 combinations

From the question, we understand that; a combination of 28 is to be selected. Because the order is not important, we make use of combination.

Also, because repetition is allowed; different balloons of the same kind can be selected over and over again.

So:

$n => 28 + 8-1$ $= 35$

$r = 28$

$Selection = ^{35}^C_{28$

$Selection = \frac{35!}{(35 - 28)!28!}$

$Selection = \frac{35!}{7!28!}$

$Selection = \frac{35*34*33*32*31*30*29*28!}{7!28!}$

$Selection = \frac{35*34*33*32*31*30*29}{7!}$

$Selection = \frac{35*34*33*32*31*30*29}{7*6*5*4*3*2*1}$

$Selection = \frac{33891580800}{5040}$

$Selection = 6724520$

Solving (b): At most 12 red balloons

First, we calculate the ways of selecting at least 13 balloons

Out of the 28 balloons, there are 15 balloons remaining (i.e. 28 - 13)

So:

$n => 15 + 8 -1 = 22$

$r = 15$

Selection of at least 13 =

$At\ least\ 13 = ^{22}C_{15}$

$At\ least\ 13 = \frac{22!}{(22-15)!15!}$

$At\ least\ 13 = \frac{22!}{7!15!}$

$At\ least\ 13 = 170544$

Ways of selecting at most 12 =

$At\ most\ 12 = Total - At\ least\ 13$ --- Complement rule

$At\ most\ 12 = 6724520- 170544$

$At\ most\ 12 = 6553976$

Solving (c): At most 8 blue balloons

First, we calculate the ways of selecting at least 9 balloons

Out of the 28 balloons, there are 19 balloons remaining (i.e. 28 - 9)

So:

$n => 19+ 8 -1 = 26$

$r = 19$

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$At\ least\ 9 = ^{26}C_{19}$

$At\ least\ 9 = \frac{26!}{(26-19)!19!}$

$At\ least\ 9 = \frac{26!}{7!19!}$

$At\ least\ 9 = 657800$

Ways of selecting at most 8 =

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$At\ most\ 8 = 6724520- 657800$

$At\ most\ 8 = 6066720$

Solving (d): 12 red and 8 blue balloons

First, we calculate the ways for selecting 13 red balloons and 9 blue balloons

Out of the 28 balloons, there are 6 balloons remaining (i.e. 28 - 13 - 9)

So:

$n =6+6-1 = 11$

$r = 6$

Selection =

$^{11}C_6 = \frac{11!}{(11-6)!6!}$

$^{11}C_6 = \frac{11!}{5!6!}$

$^{11}C_6 = 462$

Using inclusion/exclusion rule of two sets:

$Selection = At\ most\ 12 + At\ most\ 8 - (12\ red\ and\ 8\ blue)$

$Only\ 12\ red\ and\ only\ 8\ blue\ = 170544+ 657800- 462$

$Only\ 12\ red\ and\ only\ 8\ blue\ = 827882$

$At\ most\ 12\ red\ and\ at\ most\ 8\ blue = Total - Only\ 12\ red\ and\ only\ 8\ blue$

$At\ most\ 12\ red\ and\ at\ most\ 8\ blue = 6724520 - 827882$

$At\ most\ 12\ red\ and\ at\ most\ 8\ blue = 5896638$

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