Question

Lynne needs to borrow $7250 for cosmetic surgery. she obtains a loan from her grandmother for 54 months at a simple interest rate of 5.1% what is the loans future value?

Answer 1

Answer:

Future Value = $8174.375

Explanations:

The amount borrowed by Lynne is the principal

Let the principal be represented by P

P = $7250

Let the simple Interest Rate be represented by r

r = 5.1% = 5.1 / 100

r = 0.051

Let the time( in years) be represented by t

t = 54 months

12 months = 1 year

54 months = 2 ½ years = 2.5 years

t = 2.5 years

The future value, FV, of a principal , p, at a simple interest, r, for a period of time, t, is given by the formula:

FV = p ( 1 + rt)

FV = 7250 ( 1 + 0.051(2.5) )

FV = 7250 ( 1 + 0.1275)

FV = 7250 ( 1.1275)

FV = $8174.375