The new loan amount is $113,797
What is compound interest?
Compound interest is the interest imposed on a loan or deposit amount. It is the most commonly used concept in our daily existence. The compound interest for an amount depends on both Principal and interest gained over periods. This is the main difference between compound and simple interest.
We can find new loan amount as shown below:
Total amount of loan=4*6,970+4*11,320
=27,880+45,280
=$73,160
Now, we will find new loan amount using compound interest formula.
Amount=
P=$73,160
n=12
t=1 year
r=4.5%=0.045
Putting in formula
Amount
=$113,797.039
Rounding to nearest dollar
=$ 113,797
Hence, new loan amount after one-year grace period is $113.797.
Learn more about Compound Interest here:
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