Question

Monique got a loan where she repays $300 every month. The interest rate is 3.2%/a, compounded monthly. It will take her 6 years to pay off the loan. Which formula relates to this situation?

A. Annuity: Present value

B. Lump sum: Present value

C. Annuity: Future value

D. Lump sum: Future value

Answer 1

The formula that relates to this situation is Annuity: Future value.

Step-by-step explanation:

The formula that relates to this situation is Option C: Annuity: Future value.

An annuity is a series of equal payments made at regular intervals. In this case, Monique is repaying $300 every month. The future value refers to the total amount that will be accumulated or repaid at the end of a certain period. Monique will take 6 years to pay off the loan, and by using an annuity formula, we can calculate the future value of the loan.