Question

Another bank is also offering favorable terms, so Rahul decides to take a loan of $18,000 from this bank. He signs the loan contract at 10% compounded daily for three months. Based on a 365-day year, what is the total amount that Rahul owes the bank at the end of the loan's term? (Hint: To calculate the number of days, divide the number of months by 12 and multiply by 365.)
a. $18,086.74
b. $17,902.18
c. $18,455.86
d. $19,563.21

Answer 1

Answer:

final loan amount = $18,455.86

so correct option is c. $18,455.86

Explanation:

given data

loan = $18000

rate =  10%

time = 3 months

to find out

total amount that Rahul owes the bank at the end of the loan

solution

we know that number of day in 3 months is

number of day = 3 × $\frac{365}{12}$

number of day = 91.25 days

loan rate = $\frac{0.10}{365}$

loan load = 0.00027397

now final loan amount will be

final loan amount = loan amount × $(1+r)^{t}$      

final loan amount = $18000  × $(1+0.00027397)^{91.25}$  

final loan amount = $18,455.86

so correct option is c. $18,455.86