Question

In order to start a small business a student takes out a simple interest loan for $2000.00 for 3 months at a rate of 12.25%. The amount of interest is $61.25. What is the future value of the loan?

Answer 1

Step-by-step explanation

We are asked to get the future value given that the student takes out a simple interest

Thus

we will use

`FV=PV(1+rt)`

In our case

`r=\frac{12.25\text{\%}}{12}=(0.1225)/(12)`
`\begin{gathered} FV=2000(1+(0.1225*3)/(12)) \\ \\ FV=2000(1.030625) \\ \\ FV=\text{ \$20612.5} \end{gathered}`

The future value is $20612.5