In order to start a small business a student takes out a simple interest loan for $7000 for 9 months with 12% interest. How much interest must the student pay (round to the nearest cent) and find the future value of the loan (round to the nearest cent)

Question

anonymous · Answer

@texaschic101

danjs · Answer

REmember the definition for the simple interest

Simple Interest = Current Value x rate  x time in years

I = P*r*t

just have to calculate the interest I

danjs · Answer

r = 0.12
P = 7000
t  = 9/12

texaschic101 · Answer

but what about the future value ? Thats where I get lost

danjs · Answer

yeh , i guess they want that in terms of time maybe,

texaschic101 · Answer

does this have anything to do with it...or am I way off... http://www.algebra.com/algebra/homework/Finance/PMTFV.lesson

anonymous · Answer

I'm not sure

danjs · Answer

Future Value = Start Value + Accumulated interest

texaschic101 · Answer

so basically do the I = PRT to find I, and when that is found, add it back to P ??

danjs · Answer

value of the loan at 9months is the future i assume, not t

danjs · Answer

FV = P + P*r*t    

FV = P(1+r*t)

texaschic101 · Answer

oh....ok...I see now.

FV = 7000 + 7000 * 0.12 * 9/12(or 3/4)

texaschic101 · Answer

you get it smiley ?

anonymous · Answer

kinda

texaschic101 · Answer

FV = 7000 + 7000 * 0.12 * 3/4
FV = 7000 + 840 * 3/4
FV = 7000 + 630
FV = 7630

According to the formula that Dan gave us....I got this

anonymous · Answer

oh alright what was the amount of interest