Given:
P = $50,000, the principal
r = 12% = 0.12, the interest rate
t = 9 years.
We are not given the compounding interval.
We shall consider two cases
(a) n = 12, monthly compounding
(b) n = 1, yearly compounding.
The value of the loan is given by
[tex]A = P(1 + \frac{r}{n} )^{nt}[/tex]
When n=12, obtain
A = 50000( 1 +0.12/12)¹⁰⁸ = $146,446.29
When n=1, obtain
A = 50000(1 +0.12)⁹ = $138,653.94
Answer:
$146,446.29 for monthly compounding.
$138,653.94 for yearly compounding.
