Calculating the finance charge on a loan, they borrowed 500.00 for one year and

Question

Calculating the finance charge on a loan, they borrowed 500.00 for one year and pay $50 in interest, the bank charging 5.00 service charge, what is the financial charges on this loan?

Calculate annual percentage rate, they borrowed 500.00 on January 1,2006 and paid it all back at once on December 31, 2006 what was that annual percentage rate?

Calculate simple interest on a loan, David convinced his aunt to loan him 2,000.00 to purchase a plasma TV. She has agreed to charge only 6% simple interest, and he agreed to repay the loan at the end of one year, how much interest will he pay for the year?

Explanation / Answer

The finacial charges includes with interst and another additional charges paid by the borrower to the bank on loan payment. in our case the finacial charges : interest =$50 and service charge=$5 total=$50+$5 =$55 annual percentage rate= [finacial charges / laon ]*100 =[55/500]*100 =11% simple interest:If no interest is earned on interest the investment is called simple interest.means that the gain interest won't be re-invested like compound. for this formula: simple interest = principal*interest rate =2000*6% =$120 The re -pay amount at the end of one year would be : principal amount +inteerest =$2000+$120 =$2120 or Future value =Present value *[1+number of years*interest rate] Future value =$2000[1+(1*0.06)] =$2000[1.06] =$2120

Related Questions

Navigate

• Browse (All)
• Browse C
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.