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2 August, 12:29

Joe Smith borrowed $46,000 to pay for a startup business. Joe must repay the loan at the end of 8 months in one payment with a 5.2 percent simple interest rate. What is the total amount that Joe must repay at that time

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  1. 2 August, 12:42
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    The correct answer is $47,596.2.

    Explanation:

    According to the scenario, the given data are as follows:

    Total amount (P) = $46,000

    Rate of interest = 5.2%

    Time period = 8 months

    So, rate of interest for 8 months (r) = 5.2% * 8 : 12 = 3.47%

    Time period (t) = 1

    So, we can calculate the Joe loan repayment value by using following formula:

    Loan repayment value = P * (1 + r) ^t

    = $46,000 * (1 + 3.47%) ^1

    = $46,000 * (1.0347) ^1

    = $47,596.2
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