To finance his small business, Sahithi borrowed $15,000 eight months ago and an additional $4,200 three...

To finance his small business, Sahithi borrowed $15,000 eight months ago and an additional $4,200 three months ago. If the loans carry interest at 4.25%, what single payment can Sahithi make five months from now to fully repay the debt? (Do not round intermediate values. Round your answer to 2 decimal places.)

please i need the answers to these questions as quick as possible

Solutions

Expert Solution

We have to calculate Final value of both the borrowed amounts i.e principal + Interest.

So for borrowed amount of $15000

Sahithi had taken loan eight months ago .So till today Interest for 8 months would have been accrued on this amount

Interest amount for 8 months will be $15000 * 4.25% * 8/12 = $425. So today's value of loan is $15000 + $425 = $15425

Now we Sahithi have to repay this loan 5 months from today . So we have to add 5 months interest to today's amount .

It will be $15000 * 4.25% * 5/12 = $265.63

So Amount Sahithi have to pay after 5 months for 1st loan will be $15425 + $265.63 =$15690.63

Similarly for 2nd loan amount of $4200

Sahithi had taken loan three months ago .So till today Interest for 3 months would have been accrued on this amount.

So interest for 3 months will be $4200 * 4.25 % * 3/12 = $44.63. So today's value of this loan is $4200 + $44.63 = $4244.63

Now Sahithi have to repay this loan 5 months from today . So we have to add 5 months interest to today's amount .

It will be $4200 * 4.25% * 5/12 = $74.38

So Amount Sahithi have to pay after 5 months for the 2nd loan = $4244.63 + $74.38 = $4319.01

So one single payment Sahithi can made after five months will be $15690.63 + $4319.01 = $20009.64

ekkarill92 answered 1 year ago

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