Anvil Inc. borrowed $60,000 from Star Bank and agreed to repay the loan as a lum

Question

 Anvil Inc. borrowed $60,000 from Star Bank and agreed to repay the loan as a lump sum in three years. The payment will include both principal and interest. The interest rate is 12% compounded quarterly.  Calculate the amount of interest that Anvil will pay to Star Bank when the loan matures in three years. Do not use decimals in your answer.   Use the time value of money factors posted on carmen to answer this question. To access these factors, click on content and then scroll to the bottom and click on the link labeled present & future value table factors. No credit will be awarded for this question using a means other than these table factors to answer this question. 

Explanation / Answer

Effective Annual interest Rate =(1+0.12/4)^4)-1 Year Loan Interest Rate Interest Total O/s 0.12550881 1 60000.00 12.55% 7530.53 67530.53 2 67530.53 12.55% 8475.68 76006.20 Total Interest paid is $25545.65 3 76006.20 12.55% 9539.45 85545.65 25545.65 229082.38

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