Question

Lynne needs to borrow $6000 for cosmetic surgery. She obtains a loan from her grandmother for 18 months at a simple interest rate of 6%. What is the loans future value?

Answer 1

To calculate the future value of the loan, we can use the simple interest formula:

Future Value = Principal + (Principal * Interest Rate * Time)

Given:

Principal (Loan amount) = $6000

Interest Rate = 6% = 0.06 (expressed as a decimal)

Time (Loan period) = 18 months

Future Value = $6000 + ($6000 * 0.06 * 18)

Future Value = $6000 + ($3600)

Future Value = $9600

Therefore, the future value of the loan is $9600.