Question

Another bank is also offering favorable terms, so Rahul decides to take a loan of $12,000 from this bank. He signs the loan contract at 5% compounded daily for 12 months. Based on a 365-day year, what is the total amount that Rahul owes the bank at the end of the loan's term? (Hint: To calculate the number of days, divide the number of months by 12 and multiply by 365.)

Answer 1

$12,615.21

Step-by-step explanation:

The formula for calculating future value:

FV = P (1 + r)^mn

FV = Future value

P = Present value

R = interest rate

N = number of years

m = number of compounding

$12,000 (1 + 0.05 / 365)^365 = $12,615.21