Question

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

Answer 1

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.