Question

A loan of $12000 was borrowed from a bank at 14% per annum .Calculate the interest on the loan at the end of the first year. The total amount owing at tge end of the first year. A repayment of $7800was made at the start of the second year
Calculate the amount still outstanding at the start of the second year, the interest on the outstanding amount at the end of the second year.Please show all working thank you

Answer 1

Answer:

Step-by-step explanation:

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)