help in homework

New User?

Fill This Form To Receive Instant Help

Help in Homework
trustpilot ratings
google ratings


Homework answers / question archive / A company currently owes $30,000 to a bank for a loan it took 6 years and 4 months ago

A company currently owes $30,000 to a bank for a loan it took 6 years and 4 months ago

Finance

A company currently owes $30,000 to a bank for a loan it took 6 years and 4 months ago. The interest rate charged on the loan was 5.5% compounded monthly. 
a. What was the original principal of the loan? 
Round to the nearest cent 
b. What was the amount of interest charged on the loan? 

pur-new-sol

Purchase A New Answer

Custom new solution created by our subject matter experts

GET A QUOTE

Answer Preview

a). Computation of the original principal of the loan:-

Here,

Rate = 5.5%/12 = 0.45833% (monthly)

n = (6*12)+4 = 76 periods (monthly)

Amount = Principal * (1+rate)^n

$30,000 = Principal * (1+0.45833%)^76

Principal = $30,000 / 1.4156

= $21,192.77 Or $21,193

 

b). Computation of the amount of interest charged on the loan:-

Amount of interest = Amount - Principal

= $30,000 - $21,192.77

= $8,807.23 Or $8,807

Sitejabber (5.0)

BBC (5.0)

Trustpilot (4.9)

Google (5.0)