Question

A college student takes out a $ 7,500 loan from a bank. What will the balance of the loan be after one year (assuming the student has not made any payments yet): a. if the bank charges 3.8% interest each year? b. if the bank charges 5.3% interest each year?

Answer 1

Substitute P=7500, r=0.053 and t=1 in equation (1). Therefore, the balance of the loan be after one year is $7897.5