Answer:
- The final value (FV) that is paid in a loan (which is the sum of the capital and the interests) equals the present value (PV) of the loan multiplied by
, in a simple interest context, where "n" equals the periods of time and "i" equals the interest rate valid for that periodicity.
- Then
. In this case, PV=$15,000; final value equals FV=$15,000+1,687.5= $16,687.5.
- We should clear "n" from our equation, which means:
. Dividing both sides by 15,000, then subtracting 1 both sides, and finally dividing by 0.075 both sides, results in n=1.5.
- Then, Malorie had the loan for one an a half periods.