Answer to Question #55329 in Economics for Antornette Love

Question

Lets say that you borrow 1200 at 8% annual interest rate, compounded quartly, and plan to pay back the loan and interest together at the end of the third year. The sum to be paid can be determined from:

a. F=1200(F/P,8%,3)
b. F=1200(F/P,2%,3)
C. F=1200(F/P,8%,12)

Answer 1

If you borrow 1200 at 8% annual interest rate, compounded quarterly, for 3 years, then the sum to be paid can be determined from F=1200(F/P,8%,3).
So, the right answer is a. F=1200(F/P,8%,3).