Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
![**Loan Repayment Example**
A friend lends you $200 for a week, which you agree to repay with a 5% one-time interest. How much will you have to repay?
---
To calculate the repayment amount:
1. **Initial Loan Amount**: $200
2. **Interest Rate**: 5%
**Interest Calculation**:
\[ \text{Interest} = \text{Principal} \times \text{Interest Rate} \]
\[ \text{Interest} = 200 \times 0.05 = 10 \]
**Total Repayment**:
\[ \text{Total Repayment} = \text{Principal} + \text{Interest} \]
\[ \text{Total Repayment} = 200 + 10 = 210 \]
Therefore, you will need to repay $210 at the end of the week.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F2b3aaa5e-0b4a-45f3-8851-c5337c60c883%2F6c4c112e-eb38-4d4c-8601-6f718953c8fa%2Fy457d6_processed.jpeg&w=3840&q=75)
Transcribed Image Text:**Loan Repayment Example**
A friend lends you $200 for a week, which you agree to repay with a 5% one-time interest. How much will you have to repay?
---
To calculate the repayment amount:
1. **Initial Loan Amount**: $200
2. **Interest Rate**: 5%
**Interest Calculation**:
\[ \text{Interest} = \text{Principal} \times \text{Interest Rate} \]
\[ \text{Interest} = 200 \times 0.05 = 10 \]
**Total Repayment**:
\[ \text{Total Repayment} = \text{Principal} + \text{Interest} \]
\[ \text{Total Repayment} = 200 + 10 = 210 \]
Therefore, you will need to repay $210 at the end of the week.
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