Question

Juan's Jewelry Store signed a promissory note on a loan for $52,000, borrowed for 18 months at an annual interest rate of 8.5%. How much will the business owe at the dateof maturity?$57,780$58,630$59,120$60,060None of these choices are correct.

Answer 1

Principal, P is $52,000 and A is amount

Duration, n is 18 months and

Interest rate is 8.5%.

`A=P(1+(r)/(12))^n`
`r=(8.5)/(100)=0.085`

Substituting the variables into the equation,

`A=52000(1+(0.085)/(12))^(18)`

Since it's a monthly compound interest, you solve annually (for 12 months),

`\begin{gathered} A=52000(1+0.007083)^(18) \\ A=52000(1.007083)^(18)^{} \\ A=52000(1.1355) \\ A=59046 \end{gathered}`

Since Amount A is $59,046, hence the correct option is C.