Question

If kirndeep borrows $3000 at 14%/a compounding daily for 38 months. What is the time of this loan in years, rounded to one decimal?

Answer 1

Time of loan in years = 3.167 = 3.2 years rounded to 1 decimal

Explanation:

The question is only asking for the number of years, not the accrued principal. This should be straightforward:

38 months = 38/12 years = 3.166.... = 3.2 years rounded to 1 decimal point

Here are the accrued amount and interest computations in case you need them:

14% interest annually = 0.14 decimal

Since it is compounded daily we have to divide by 365, the number of days in a year

Also the time period will now be 365 x number of years = 365 x 3.2 = 1168 since it is being compounded daily

At 14% compounded daily, the accrued amount will be

`A = \left( 1 + (0.14)/(365)\right)^((365)( 3.2)) = \$4,695.13\\\\\mathrm{Interest } = \$4,695.13 - \$3000 = \$1,695.13`