The total amount owed at time t, or the loan's future value A, is $1728.
What is Simple Interest ?
Simple interest is a quick and simple formula for figuring out how much interest will be charged on a loan. The daily interest rate, the principle, and the number of days between payments are multiplied to calculate simple interest.
Given that,
Principal = $800,
Rate of Interest = 7.25%
Time = 5 months
Equation:
A= P(1 + rt)
Calculation:
First, converting R=7.25% percent to r a decimal
r=0.0725 per year.
Solving our equation:
A= P(1 + rt)
A= 800(1 + (7.25)(0.416))
By solving,
A= $1728
Consequently, the entire amount owed at time t, or the loan's future value A, is $1728.
To learn more about Rate of Interest click here:
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