Question

a small business owner is applying for a small business loan and has been approved for a $50,000 loan with a 6.15% annual interest. the first loan is a simple interest rate, the second loan compounds interest quarterly, and the third loan compounds interest continuously. the small business owner plans to pay off the loan in three years and 7 months. determine the total value of the loan with simple interest.

Answer 1

Answer and Explanation:

To calculate the total value of the loan with simple interest, we can use the formula:

Loan amount x (Interest rate x Time in years) = Simple interest

Where,

Loan amount = $50,000

Interest rate = 6.15%

Time in years = 3 years + 7 months / 12 months/year = 3.58 years

So,

Simple interest = $50,000 x (6.15% x 3.58) = $10,439

Therefore, the total value of the loan with simple interest would be $50,000 + $10,439 = $60,439.