by splitting the loan into two 3 year loans, how much more will you pay in interest ?
College Algebra
7th Edition
ISBN:9781305115545
Author:James Stewart, Lothar Redlin, Saleem Watson
Publisher:James Stewart, Lothar Redlin, Saleem Watson
Chapter8: Sequences And Series
Section8.4: Mathematics Of Finance
Problem 31E: DISCOVR: Amortizing a Mortgage When they bought their house, John and Mary took out a $90,000...
Related questions
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] |
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 3 steps
Recommended textbooks for you
College Algebra
Algebra
ISBN:
9781305115545
Author:
James Stewart, Lothar Redlin, Saleem Watson
Publisher:
Cengage Learning
Holt Mcdougal Larson Pre-algebra: Student Edition…
Algebra
ISBN:
9780547587776
Author:
HOLT MCDOUGAL
Publisher:
HOLT MCDOUGAL
Algebra and Trigonometry (MindTap Course List)
Algebra
ISBN:
9781305071742
Author:
James Stewart, Lothar Redlin, Saleem Watson
Publisher:
Cengage Learning
College Algebra
Algebra
ISBN:
9781305115545
Author:
James Stewart, Lothar Redlin, Saleem Watson
Publisher:
Cengage Learning
Holt Mcdougal Larson Pre-algebra: Student Edition…
Algebra
ISBN:
9780547587776
Author:
HOLT MCDOUGAL
Publisher:
HOLT MCDOUGAL
Algebra and Trigonometry (MindTap Course List)
Algebra
ISBN:
9781305071742
Author:
James Stewart, Lothar Redlin, Saleem Watson
Publisher:
Cengage Learning
Algebra & Trigonometry with Analytic Geometry
Algebra
ISBN:
9781133382119
Author:
Swokowski
Publisher:
Cengage
