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Math Help - Greg need help with Math

  1. #1
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    Greg need help with Math

    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?
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  2. #2
    MHF Contributor

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    Quote Originally Posted by Kenny7 View Post
    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.




    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.

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