Answer to Question #251088 in Economics of Enterprise for Yan

Question

A man borrows ₱6,400 from a loan association. In repaying this debt he has to pay ₱400 at the end of every 3 months on the principal and a simple interest of 16% on the principal outstanding at that time. Determine the total amount he has paid after paying all his debt.

Answer 1

Solution:

The correct answer is ₱8,576.00.

$\frac{3}{12} = 0.25$

Interest 1 = 6400 $\times$ 0.25 $\times$ 0.16 = 256

Interest 2 = 6000 $\times$ 0.25 $\times$ 0.16 = 240

Interest 16 = 400 $\times$ 0.25 $\times$ 0.16 = 16

Total Principal = 6400 + S

S = $\frac{n}{2} \times$ (a₁ +a_n) = $\frac{16}{2} \times (256 + 16) = 2,176$

TP = 6400 + 2176 = 8576