# Greg need help with Math

• Jan 6th 2009, 05:29 PM
Kenny7
Greg need help with Math
(Talking)Hi! this is Gregory and I some help with my Math Assignment. Thanks
Here is what I have so far, please let me know if I am on the right track.

4. Anna Cavanaugh loaned her friend Jason \$1,000 for 6 months at 6% simple interest. What is the future value of the loan and how much finance charge will Jason pay?
R= I/PT
=\$1000 x .06 x 6/12
=\$30
\$1000 + \$30= \$1030(FV of the Loan)

5. Acton can choose from two loan offers: \$12,000 at 8% simple interest for 9 months; or a \$12,000 9-month discounted loan at 7% discount. Based on the actual interest paid and the true rate on the discounted loan, which of the two loan offers will Acton choose? Explain your answer.
I=PRT
First offer = \$12,000 x .08 x 9/12= \$720
Second Offer= \$12,000 x .07 x 9/12=\$630

\$12,000 - \$630 = \$11,370
630/11,370= 5.5%

Now, how do I explain this answer?
• Jan 7th 2009, 04:36 AM
HallsofIvy
Quote:

Originally Posted by Kenny7
(Talking)Hi! this is Gregory and I some help with my Math Assignment. Thanks
Here is what I have so far, please let me know if I am on the right track.

4. Anna Cavanaugh loaned her friend Jason \$1,000 for 6 months at 6% simple interest. What is the future value of the loan and how much finance charge will Jason pay?
R= I/PT
=\$1000 x .06 x 6/12
=\$30
\$1000 + \$30= \$1030(FV of the Loan)

Yes, that looks good.

Quote:

5. Acton can choose from two loan offers: \$12,000 at 8% simple interest for 9 months; or a \$12,000 9-month discounted loan at 7% discount. Based on the actual interest paid and the true rate on the discounted loan, which of the two loan offers will Acton choose? Explain your answer.
I=PRT
First offer = \$12,000 x .08 x 9/12= \$720
Second Offer= \$12,000 x .07 x 9/12=\$630

\$12,000 - \$630 = \$11,370
630/11,370= 5.5%
But that was only for 9 months. For a full year, it would be 0.055*12/9= 7 and 1/3 percent.

Quote:

Now, how do I explain this answer?
Which loan do you think Acton would choose? Why?