A bank loans a customer $100,000 for a period of 2 years. The simple interest rate of the loan is 5.7%. What is the total amount
that the customer will need to pay the bank over the 2 years?
1 answer:
R = monthly loan rate = 5.7 / 1200 =
<span>
<span>
<span>
0.00475
</span>
</span>
</span>
n - number of payments
p - principal
Total Loan Cost = (r * p * n) / [1-(1+r)^-n]
Total Loan Cost = ( <span> <span> <span> 0.00475 </span> </span> </span> * 100,000 * 24) / [1 -(1<span>.00475)^-24]
</span>Total Loan Cost = 11,400 / 1 -(1.00475^-24)
Total Loan Cost = 11,400 / 1 -<span><span>.8924988049 </span>
</span><span>Total Loan Cost = 11,400 / </span> <span> <span> <span> 0.1075011951 </span> </span> </span>
Total Loan Cost = <span> <span> <span> 106,045.33 </span> </span> </span>
Source:
http://www.1728.org/loanfrm4.htm
n - number of payments
p - principal
Total Loan Cost = (r * p * n) / [1-(1+r)^-n]
Total Loan Cost = ( <span> <span> <span> 0.00475 </span> </span> </span> * 100,000 * 24) / [1 -(1<span>.00475)^-24]
</span>Total Loan Cost = 11,400 / 1 -(1.00475^-24)
Total Loan Cost = 11,400 / 1 -<span><span>.8924988049 </span>
</span><span>Total Loan Cost = 11,400 / </span> <span> <span> <span> 0.1075011951 </span> </span> </span>
Total Loan Cost = <span> <span> <span> 106,045.33 </span> </span> </span>
Source:
http://www.1728.org/loanfrm4.htm
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