You decide to buy a 60 in plasma TV. You borrow $4300 from the electronics store at1.8% per month simple interest, with no payments due for 2 years from the date of purchase. How much will you owe on the loan after 15 months?
so your debt would have grown to ...
4300(1.018)^15 = 5619.38
don't you love those "no payments for 2 years deals" ?
They always forget to tell you there is still interest involved.
not quite. It was simple interest, not compound.
4300(1+.018*15) = 5461.00
Thank you Steve.
To calculate the total amount owed on the loan after 15 months, we need to determine the interest accumulated during this period and add it to the principal amount borrowed.
Step 1: Calculate the interest for 15 months
First, let's calculate the monthly interest rate by dividing the annual interest rate (1.8%) by 12:
Monthly interest rate = 1.8% / 100% / 12 = 0.015
Next, to find the total interest paid in 15 months, multiply the monthly interest rate by the number of months:
Interest = 0.015 * 15
Step 2: Calculate the total amount owed
To determine the total amount owed after 15 months, add the interest to the principal amount borrowed:
Total amount owed = Principal amount + Interest
Since the principal amount borrowed is $4300, we can calculate the total amount owed by adding the interest to this amount:
Total amount owed = $4300 + Interest
Now, you just need to substitute the value of the interest calculated in Step 1 into the equation and solve for the total amount owed.