Robert gets a loan from his bank
He agrees to borrow £6000 at fixed annual simple interest rate of 7%
He also agrees to pay the loan back over a 10-year period
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Answer:
i= p * r * n
f = p + i
combine the two formulas together and you get f = p + p * r * n.
factor out the p to get f = p * (1 + r * n).
i is the interest
p is the present value or principal
r is the interest rate per time period
n is the number of time periods.
f is the future value
in your problem:
p equals 6000
r = .07 per year
n = 10 years.
the formula becomes 6000 * (1 + .07 * 10) = 6000 * 1.7 = 10200.
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