Question

A loan if 12 000 was borrowed from a bank at 14% per annum calculate the total amount owning at the first year​

Answer 1

Answer: P = $ 12000

r = 14%

t = 1 (for first year)

I = (P X r X t)/100

∴ I = (12000 X 14 X 1)/100

= 120 X 14

= $ 1680 <---------- (Interest on loan at the end of first year)

∴ Total amount owing at the end of first year = (P + I)

= (12000 + 1680)

= $ 13680

Repayment = $ 7800

Amount still outstanding (at the start of second year) = 13680 - 7800

= $ 5880

Interest on the outstanding amount at the end of second year,

P (new) = $ 5880

r (same) = 14%

t = 1 (for the current second year)

∴ I = (P X r X t)/100

= (5880 X 14 X 1)/100

= 82320 / 100

= $ 823.2 <-------------------------- (Interest on outstanding amount at the end of second year)