Question

A loan of $7,000 is taken out today, March 9, 2017. What amount will pay off...

  1. A loan of $7,000 is taken out today, March 9, 2017. What amount will pay off the debt on July 21, 2017 if the interest rate is 5.1%:
    1. compounded continuously? Use exact time and exact interest.
    1. compounded monthly and simple interest is paid for part of a period. Use Banker’s Rule for the simple interest.
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Answer #1

a)

Value of bond by continously compounding method is as follows:

b)

Value of bond by monthly compounding method is as follows:

Resultant table:

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