You borrow $1,200 at a rate of 4.5% for a period of 6 months. How much will you repay at the end of 6 months?
A. $27
B. $54
C. $1,173
D. $1,227
I've been seeing a lot of controversy about whether the answer is C or D, and I'm very confused.
1200(1 + 0.045)^(1/2) = 1226.70
1200(1 + 0.045/12)^6 = 1227.25
1200(1 + .045*6/12) = 1227
It will be one of the above depending on whether the interest is compounded annually or monthly, or whether it is simple interest.
I cannot see how it would ever be C
To find out how much you will repay at the end of 6 months, you need to calculate the total amount, including both the principal sum borrowed and the interest accrued over the 6 months.
To calculate the interest, you can use the formula: Interest = Principal Amount * Rate * Time
In this case, the principal amount is $1,200, the rate is 4.5% (which is equivalent to 0.045 as a decimal), and the time is 6 months (which is equivalent to 0.5 years).
So, the interest would be: Interest = $1,200 * 0.045 * 0.5 = $27
Now, to find the total amount to be repaid, you need to add the interest to the principal amount:
Total Amount = Principal Amount + Interest = $1,200 + $27 = $1,227
Thus, the correct answer is D. $1,227.