Question

Joan was advanced 3 loans: $6814.29 at the start of January, $8985.82 at the start of...

Joan was advanced 3 loans: $6814.29 at the start of January, $8985.82 at the start of February and $9559.59 at the start of April. She expects to repay these debts with three equal payments: one at the start of September, one at the start of October and one at the start of December. Suppose the Simple Interest rate is 5.5%. Use the start of October as a focal date.

What is the total value of the debt (loan) at the focal date?

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Answer #1

Value of the Loan taken on january with interest at start of october = 6814.29+(6814.29*9/12*5.5%)= $ 7095.38

Value of the Loan taken on Feb with interest at start of october = 8985.82+(8985.82*8/12*5.5%) = $ 9315.30

Value of the Loan taken on April with interest at start of october = 9559.59+(9559.59*6/12*5.5%) = $ 9822.48

Therefore, total value of the loan at start of the Oct = 7064.15+9274.12+9778.66 = $ 26,233.16

Note: Used October start as a focal point. so, calculated interest till that date.

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