Question

You expect to have $1000 in one year. A bank is offering loans at 6% interest per year.How much can you borrow today

Answer 1

$943.39622

Explanation:

A = final amount, = 1000

Interest, r = 6% = 0.06

Time, t = 1

Principal, P = amount you can borrow today

Using the simple interest formula :

A = P(1 + rt)

1000 = P(1 + 0.06*1)

1000 = P(1 + 0.06)

1000 = P(1.06)

P = 1000 / 1.06

P = 943.39622