Question

In order to start a small business a student takes out a simple interest loan for $2000.00 for 3 months at a rate of 12.25%. The amount of interest is $61.25. What is the future value of the loan?

Answer 1

Explanation

We are asked to get the future value given that the student takes out a simple interest

Thus

we will use

$FV=PV(1+rt)$

In our case

$r=\frac{12.25\text{\%}}{12}=\frac{0.1225}{12}$$\begin{gathered} FV=2000(1+\frac{0.1225\times3}{12}) \\ \\ FV=2000(1.030625) \\ \\ FV=\text{ \ 20612.5} \end{gathered}$

The future value is $20612.5