Question #178744

A credit union has issued a 2 years loan of $6,000. Simple interest is charged

at a rate of 8 percent per year. The principal plus interest is to be repaid at the

end of second year. Compute the interest for the 2 – year period. What amount

will be repaid at the end of the second year.

Expert's answer

Interest =

Where T is the time =2 years, P is the principal = $6000, and R is the rate at 8% (0.08)

Interest=

=

The interest to be paid at the end of the 2-year period is $960

The amount to be repaid at the end of 2 years is given as

Where FV is the future amount to be paid, R is the rate, and n is the number of years to be used in repaying the loan

The final amount to be repaid after 2 years is $6960

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