Question

Sandy borrowed 6709 R.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

she is paying back 9112.5 R.O

Interest paid back is 2,403.95

Explanation:

To find the amount, we use the compound interest formula.

This is given as;

A = I( 1 + r/n)^nt

where A is the amount we are trying to calculate

I is money borrowed = 6709

r is the interest rate = 12 1/3% = 37/3 = 12.33% which is same as 12.33/100 = 0.1233

n is the number of times interest is compounded. We have 15 2 months in 2 and a half years

t is the number of years = 2.5

Plugging these values, we have;

A = 6709(1 + 0.1233/15)^(15)(2.5)

A = 6709(1.0082)^(37.5)

A = 9112.95 R.O

Interest is amount - principal( money borrowed)

9112.95 - 6709 = 2403.95