Question

Sindi borrowed an amount of money from his

Answer 1

The present value of the loan is R576923.

What is compound interest ?

Compound interest is giving the current instalment in terms of the total previous amount.

The formula is given by

A = P(1 + r/100)ⁿ.

Where,

A = Amount, P = Principle, r = rate of interest, n = Time in years.

In case the compound if interest is given every two months that is 6 instalments each year the above given formula will be

A = P{ 1 + (r/6)/100 }⁶ⁿ.

According to the given question

Rate(r) = 7.5%

Time(n) = 6 years

The loan will be paid back in 6 years every second month and it is compounded.

∴ No. of instalments = (12 × 6)/2

= 36.

Now each instalments is of R25000

So, The total amount she has to pay back to his father is

= (25000 × 36)

= R900000.

We know compounding every two months is

A = P(1 + r/100)ⁿ

900000 = P{ 1 + (7.6/6)/100 }³⁶

900000 = P{ 1 + 1.25/100 } ³⁶

900000 = P(1.0125)³⁶

900000 = 1.56P

∴ P = 576923.

Learn more about compound interest here :

brainly.com/question/13155407

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