The present value of the loan is R576923.
<h3>What is compound interest ?</h3>
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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