Question

Jill Ley took out a loan to pay for her child's education for $60,000. The loan would be repaid at the end of 8 years in one payment with an interest of 6 percent. The total amount Jill has to pay back at the end of the loan is

Answer 1

is that 6 percent compounded any? or is it just 6% of the loan?

Answer 2

the question is ambiguous; its hard to say what the correct answer will be as is

Answer 3

im confused as well....

Answer 4

the math is easy once you know how the interest affects the loan

if its just a one time event then:

60,000(1.06) = amount to pay back

if its compounded yearly then we go:

60,000(1.06)^8 = amount to pay back

if its compounded so many times during the year then we go:

60,000(1+(.06)/n)^(n*8) = amount to pay back, where
n is the number of times it
compounds during the year

Answer 5

Tell me how did you come up with how to do that?

Answer 6

Like how did you know what to use when

Answer 7

Its a result of some tedious recurrsion formulas really.

Answer 8

ill never get this ugh....

Answer 9

when the question asks for a compunded interest rate; then you tend to use the last one.

the second and last one are really the same thing except for how the year is divided up. With the year divided up once, n = 1, the equation simplifies to the 2nd form

Answer 10

if there is no compounding of interest; then its simply the loan + interest in the end .... which is the 1st equation

Answer 11

ok
Thanks