Answer to Question #303702 in Financial Math for Munki

Question

Odwa borrowed R500 from Luyanda four months ago and 700 nine months ago. He wants to liquidate these obligations with a single payment in 12 months time from now. If a simple interest rate of 11%per year, is charged on all the months, the amount he will oay luyanda in 12 months time is?

Answer 1

$Amount (A)=(P\times R\times T)+P$

$A=500\times.11\times\frac{16}{12}+500=573.33$

$A=700\times.11\times\frac{21}{12}+700=834.75$

Total single payment=573.33+834.75=1,408.08