Answer to Question #301387 in Financial Math for Ndi

Question

Determine the present value of loan if R12000 is due in 5 years,at a simple discount ra15% per annum

Answer 1

Simple interest is given as

$I=prt$

Where P is the principal amount R12000

R is the rate of interest on the loan 15%

T is the numbers of years required to pay back 5

$\therefore I = R12000×15\%×5=R9000$

The present value=principal – interest

=R12000–R9000

=R3000