Question

Sandy borrowed 6709R.O from a bank to buy a piece of land. If the bank charges 12 1/3 % compounded each two months, what amount will she have to pay after 2 years and half? Also find the interest

paid by her.

Answer 1

Explanation:

Using the compound interest formula

`A = P(1+(r)/(n) )^(nt)`

A = final amount after t years

P = amount borrowed = Principal = 6709R

r = rate (in %) = 12 1/3%

n = number of times the interest is applied = 2 months

t = time the period elapsed = 2 1/2 years

`A = 6709(1+((37)/(300) )/((2)/(12) ) )^{(2)/(12) *(5)/(2) } \\A = 6709(1+0.1233/0.1667)^(2\0.41667) \\A = 6709(1+0.7397)^(2\0.41667) \\A = 6709(1.7397)^(2\0.41667) \\A = 6709(3.81195)\\A = 25,574.373`

She will have to pay 25,574.373R after 2 and a half years

interest paid by her = Amount - Principal

Interest paid by her = 25,574.373 - 6709

Interest paid by her = 18,865.373R