To find the amount he still owes at the end of 2 1/2 years, we need to calculate the compound interest on the loan and subtract the amount he has already repaid.
First, we need to calculate the compound interest after 2 1/2 years. The formula for compound interest is:
A = P(1 + r/n)^(nt)
Where:
A = the future value of the loan
P = the initial principal (loan amount)
r = annual interest rate (as a decimal)
n = number of times interest is compounded per year
t = number of years
In this case, the loan amount (P) is 120,000 naira, the annual interest rate (r) is 8% or 0.08, the number of compounding periods per year (n) is 1 (since they are making semi-annual payments), and the number of years (t) is 2 1/2 or 2.5.
Using the compound interest formula, we can calculate the future value of the loan after 2 1/2 years:
A = 120,000(1 + 0.08/1)^(1*2.5)
A = 120,000(1.08)^(2.5)
A ≈ 143,488.69
Next, we need to subtract the amount he has repaid from the future value of the loan:
Remaining loan amount = A - (7000 x 5)
Remaining loan amount = 143,488.69 - 35,000
Remaining loan amount = 108,488.69
Therefore, the man still owes approximately 108,488.69 naira at the end of 2 1/2 years.
A man borrows 120,000 naira from a bank to buy a computer at 8% compound interest per annum. If he repays 7000 naira every six months, work out the amount he still owes at the end of 2½years
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1 answer