Question

The principal P is borrowed at a simple interest rate are for a period of time T. Find the loans future value A, or the total amount due at time T

Answer 1

The total amount due after five years is $57,000.

Explanation:

Recall that simple interest is given by the formula:

`\displaystyle A=P(1+rt)`

Where A is the final amount, P is the principal amount, r is the rate, and t is the time (in years).

Since we are investing a principal amount of $38,000 at a rate of 10.0% for five years, P = 38000, r = 0.1, and t = 5. Substitute:

`\displaystyle A=38000(1+(0.1)(5))`

Evaluate. Hence:

`\displaystyle A=\$ 57,000`

The total amount due after five years is $57,000.