Question

A college student takes out a $7500 loan from a bank. What will the balance of the loan be after one year(assuming the student has not made any payments yet)
a. if bank charges 3.8% interest each year ?
b. if the bank charger 5.3% interest each year ?

Answer 1

Answer:

a. $7790

b. $7908

Step-by-step explanation:

A2=A1(e^kt)

A2=7500(e^(.038)(1)=7790

A2=7500(e^(.053)(1)=7908

Answer 2

Answer:

(a) $7785

(b) $7897.5

Step-by-step explanation:

Given:

Loan = $7500

We need to find the balance of the loan be after one year(assuming the student has not made any payments yet).

The formula for amount or loan is

$A=P(1+r)^t$         .... (1)

where, P is principle, r is rate of interest and t is time in years.

(a) If bank charges 3.8% interest each year.

r = 3.8% = 0.038

Substitute P=7500, r=0.038 and t=1 in equation (1).

$A=7500(1+0.038)^1$

$A=7500(1.038)$

$A=7785$

Therefore, the balance of the loan be after one year is $7785.

(b) If the bank charger 5.3% interest each year.

r = 5.3% = 0.053

Substitute P=7500, r=0.053 and t=1 in equation (1).

$A=7500(1+0.053)^1$

$A=7500(1.053)$

$A=7897.5$

Therefore, the balance of the loan be after one year is $7897.5.