Question

Juan's Jewelry Store signed a promissory note on a loan for $52,000, borrowed for 18 months at an annual interest rate of 8.5%. How much will the business owe at the dateof maturity?$57,780$58,630$59,120$60,060None of these choices are correct.

Answer 1

Principal, P is $52,000 and A is amount

Duration, n is 18 months and

Interest rate is 8.5%.

$A=P(1+\frac{r}{12})^n$$r=\frac{8.5}{100}=0.085$

Substituting the variables into the equation,

$A=52000(1+\frac{0.085}{12})^{18}$

Since it's a monthly compound interest, you solve annually (for 12 months),

$\begin{gathered} A=52000(1+0.007083)^{18} \\ A=52000(1.007083)^{18}^{} \\ A=52000(1.1355) \\ A=59046 \end{gathered}$

Since Amount A is $59,046, hence the correct option is C.