Anna Cavanaugh loaned her friend Jason 1,000 for 6 months at 6% simple interest. what is the future value of the loan and how much finance charge will Jason pay?
FV=PV(1+i)power n
FV=1000(1+.06)power 6)
=1000(1.4185)
=14185
To calculate the future value of the loan and the amount of the finance charge, we can use the formula for simple interest:
Future Value = Principal + Interest
Interest = (Principal * Rate * Time)
First, let's find the interest:
Principal = $1,000
Rate = 6% = 6/100 = 0.06
Time = 6 months
Interest = (Principal * Rate * Time)
Interest = ($1,000 * 0.06 * 6)
Interest = $360
Now, let's calculate the future value:
Future Value = Principal + Interest
Future Value = $1,000 + $360
Future Value = $1,360
Therefore, the future value of the loan is $1,360, and the finance charge that Jason will pay is $360.