if you borrow $5 today the at the end of the month you will have to pay $6 with this rate of interest COMPOUNDING MONTHLY. supposing that you borrowed $1000 today, how much will be your dues after 6 months if you are unable to pay any amount during such period.

Question

ganeshie8 · Answer

so you have borrowed `$1000` today,
can you tell how much you need to pay after `1` month ?

anonymous · Answer

$200/month

anonymous · Answer

based on my computation the interest is 20% per month.

ganeshie8 · Answer

Exactly !

ganeshie8 · Answer

may i know how u got $200 ?

anonymous · Answer

because I borrow $1000 and the interest per month is 20% 
what i did is this. $1000 X 20% = 200

anonymous · Answer

is that right?

ganeshie8 · Answer

thats absolutely right !
another way to work it without using percentages is :
for every $5, you're payign $1 interest
so for $1000, you would be paying $1000/5 interest

ganeshie8 · Answer

today :   $1000
after `1` month :  $1000 + $1000/5 
                          = $1000(1 + 1/5)
                          = $1000(1+ 0.2)

anonymous · Answer

i see..

ganeshie8 · Answer

after `2` months :  = `$1000(1+ 0.2)` +  `$1000(1+ 0.2)`/5
                               =  `$1000(1+ 0.2)`(1+ 1/5)
                               =   `$1000(1+ 0.2)`^2

ganeshie8 · Answer

the pattern continues...

ganeshie8 · Answer

after `6` months :   `$1000(1+ 0.2)`^6

ganeshie8 · Answer

thats just a compound interest formula ^^

ganeshie8 · Answer

use ur calculator to evaluate that expression : http://www.wolframalpha.com/input/?i=1000%281%2B0.2%29%5E6

anonymous · Answer

ok

anonymous · Answer

the total is 2,985.98

anonymous · Answer

i thought the formula for compound interest A=P(1+r/n)nt

ganeshie8 · Answer

yes, thats the formula :
P = 1000
r = 0.2
n = 1
t = 6

anonymous · Answer

may I ask why "n" is 1?

anonymous · Answer

ok I get it..thank u for answering my question. :)

ganeshie8 · Answer

np :)
n=1 because your interest rate is 20% per MONTH, since we're compounding MONTHly, number of compounding intervals (n)  would be just `1`

anonymous · Answer

yup. that's what you did a while ago. you divide 1/5 and you get .2

anonymous · Answer

yours is much simple than to my teacher. Thank you so much! and it's very clear to me now!

ganeshie8 · Answer

glad to hear that :) yw :)

jmark · Answer

$6-$5 =$1 $1 is 20% of $5=$1 so, 20% of $1000=$200 after 6 months=$1200 CBSE Class 7 Maths Question Papers - http://edworld.hpage.co.in/cbse-class-7-maths-question-papers_3668604.html