by splitting the loan into two 3 year loans, how much more will you pay in interest ?
MATLAB: An Introduction with Applications
6th Edition
ISBN:9781119256830
Author:Amos Gilat
Publisher:Amos Gilat
Chapter1: Starting With Matlab
Section: Chapter Questions
Problem 1P
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Question
by splitting the loan into two 3 year loans, how much more will you pay in interest ?
![### Loan Interest Calculation
Suppose you have borrowed $13,700 for school expenses at 8% simple interest for 6 years.
#### Part 1 of 4
**(a) How much simple interest would you pay?**
After 6 years, you would pay **$6,576** in simple interest.
#### Part 2 of 4
**(b) Suppose the bank splits the loan into six 1-year loans, so that the future value of the loan would be recalculated at the end of each one-year period, with interest charged on the new amount for the next year. Fill in the following table, which will show the future value of the loan at the end of each 1-year period. Round to the nearest dollar.**
| End of Year | Future Value, $ |
|-------------|------------------|
| 1 | 14,796 |
| 2 | 15,980 |
| 3 | 17,258 |
| 4 | 18,639 |
| 5 | 20,130 |
| 6 | 21,740 |
#### Part 3 of 4
**(c) How much more interest would you pay with the loan being split up this way?**
By splitting the loan into six 1-year loans, you will pay **$1,644** more in interest.
#### Part 4 of 4
**(d) Repeat the process with the loan split into two 3-year loans. Round to the nearest dollar.**
| End of Year | Future Value, $ |
|-------------|------------------|
| 3 | [Value] |
| 6 | [Value] |](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Faf54cc92-fe70-42ec-a5a5-6c03b8447a69%2Fbbcfd8c9-6946-4415-b31b-c8444cc1cfa1%2Fz3osz28_processed.jpeg&w=3840&q=75)
Transcribed Image Text:### Loan Interest Calculation
Suppose you have borrowed $13,700 for school expenses at 8% simple interest for 6 years.
#### Part 1 of 4
**(a) How much simple interest would you pay?**
After 6 years, you would pay **$6,576** in simple interest.
#### Part 2 of 4
**(b) Suppose the bank splits the loan into six 1-year loans, so that the future value of the loan would be recalculated at the end of each one-year period, with interest charged on the new amount for the next year. Fill in the following table, which will show the future value of the loan at the end of each 1-year period. Round to the nearest dollar.**
| End of Year | Future Value, $ |
|-------------|------------------|
| 1 | 14,796 |
| 2 | 15,980 |
| 3 | 17,258 |
| 4 | 18,639 |
| 5 | 20,130 |
| 6 | 21,740 |
#### Part 3 of 4
**(c) How much more interest would you pay with the loan being split up this way?**
By splitting the loan into six 1-year loans, you will pay **$1,644** more in interest.
#### Part 4 of 4
**(d) Repeat the process with the loan split into two 3-year loans. Round to the nearest dollar.**
| End of Year | Future Value, $ |
|-------------|------------------|
| 3 | [Value] |
| 6 | [Value] |
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