To borrow $500, you are offered an add-on interest loan at 8 percent. Two loan payments...

To borrow $500, you are offered an add-on interest loan at 8 percent. Two loan payments are to be made, one at six months and the other at the end of the year. Compute the two equal payments.

Solutions

Expert Solution

The total interest accrued in a year is = Principal *Interest*time

Interest = 500*0.08*1 = $ 40

Hence each payment will be = (500+40)/2 = $ 270

jeff jeffy answered 2 years ago

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