Answer to Question #137127 in Financial Math for Tharushika

Question

5. Suppose you borrow 100,000 rupees from a bank that charges 15% interest. Using relevant theories, determine how much you will owe the bank over a period of 5 years.

Answer 1

Discrete compound interest

$$A=P(1+r)^t$$

$$A=100000(1+0.15)^5=201135.72\ rupees$$

Discrete compound interest

$$A=Pe^{rt}$$

$$A=100000\cdot e^{0.15\cdot5}=211700.00\ rupees$$