Question

A small business owner is applying for a small business loan and has been approved for a $50,000 loan with 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 3 years and 7 months.

Part A: Determine the total value of the loan with the simple interest. Show all work and round your answer to the nearest hundredth. (3 points)

Part B: Determine the total value of the loan with the quarterly compounded interest. Show all work and round your answer to the nearest hundredth. (3 points)

Part C: Determine the total value of the loan with the continuously compounded interest. Show all work and round your answer to the nearest hundredth. (2 points)

Part D: Using the values from Parts A, B, and C, explain which loan option is the best choice for the small business owner. (2 points)

PLS ELP IM SO SCARED

Answer 1

Answer: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 interestWhere,Loan amount = $50,000Interest rate = 6.15%Time in years = 3 years + 7 months / 12 months/year = 3.58 yearsSo,Simple interest = $50,000 x (6.15% x 3.58) = $10,439Therefore, the total value of the loan with simple interest would be $50,000 + $10,439 = $60,439.

Step-by-step explanation: 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 interestWhere,Loan amount = $50,000Interest rate = 6.15%Time in years = 3 years + 7 months / 12 months/year = 3.58 yearsSo,Simple interest = $50,000 x (6.15% x 3.58) = $10,439Therefore, the total value of the loan with simple interest would be $50,000 + $10,439 = $60,439.